The Vertical Horizontal Filter (VHF) indicator for MetaTrader4 was created by Adam White and got published first in August, 1991, in a magazine called “Issues of Futures” (in an editorial captioned Tuning into trendiness with VHF indicator).
The Vertical Horizontal Filter (VHF) is commonly deployed by traders to gauge trend activity. The VHF is able to determine the phase of a price trend. Usually, price trend can be in a choppy phase/congestion phase or a trending phase.
The VHF indicator was created to give traders information on whether prices are trending in a specific direction or are heading into a transition phase.
The Vertical Horizontal Filter (VHF) can be interpreted in three different ways:
The VHF values itself can be used to determine the degree of price orientation. High VHF values signifies a more stable trend, while low VHF values are used to describe less stable trend.
The congestion phase in the market can be predicted using the direction of the VHF indicator. A trending market is represented by a rising VHF line whereas a congestion phase is depicted by a falling VHF line.
The VHF indicator can also be used away from its usual trend following function. This means that when the VHF value gets too high, it points to an approaching congestion period. In the same vein, an upcoming trending session in the market is depicted by extremely low VHF values.
MT4 Indicator Characteristics
Currency pairs: Any
Platform: Metatrader 4
Type: chart window indicator
Customization options: Variable (N), Colors, width & Style.
Time frames: 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, 1-Day, 1-Week, 1-Month