Vertical Horizontal Filter
The Vertical Horizontal Filter (VHF) identifies whether a market is in a trending or choppy movement phase.
The VHF indicator determines the trend of prices to help to decide which indicators to use. The higher the VHF, the higher the degree of trending and the more you should be using trend- following indicators. Rising VHF indicates a developing trend; falling VHF indicates that prices may be entering a congestion phase.
Vertical Horizontal Filter does not, itself, generate trading signals, but determines whether signals are taken from trend or momentum indicators.
Rising values indicate a trend.
Falling values indicate a ranging market.
High values precede the end of a trend.
Low values precede a trend start.