Tsar wrote: ↑
Sun Mar 11, 2018 10:27 pm
The Sine Wave (also called MESA) indicator is based on the assumption that markets move in Cyclical Patterns.
Sine Wave indicator was developed in 1996 by the American analyst John Ehlers, who called it a “Trend oscillator”. It is based on the idea of the Economical processes periodicity: the indicator detects this periodicity violations.
The MESA Sine Wave utilizes 2 sine plots to depict if the Market is in a Trend mode or in a Cycle mode.
One line depicts the Sine of the calculated phase angle over time. The other line depicts the Sine of the phase angle advanced by 45 degrees, which is called the Lead Sine. The crossings of the Sine and Lead Sine together provide precise and advanced picture of Cycle mode turning points.
They call it a Trend mode if the plots start to wander the Market.
The Market is in the cycling mode if the 2 plots look like a Sine wave the Market.
In a Trend mode, the Sine and Lead Sine plots typically weaken in a sideways pattern around the Zero-point, running distant and parallel from each other.
The indicator acts in a Completely opposite way comparing to the Adaptive Moving Averages during a Trend Market: in case of a definite trend, Both indicator Lines (Lead Sine and Sine Wave) move parallel to each other and show the Trend direction by their location relative to each other; in case of a flat, the Sine Wave indicator quickly reacts on the Market swing movements. That is one of a few indicators that can be used both during a Trend Market and a Flat and it shows accurate results in either case.
Sine Wave indicator is that it will anticipate Cycle mode turning points rather than waiting for Confirmation (as the majority of Oscillators do).
It is an extremely helpful trait. The indicator also has an extra-advantage that allows the Trend mode whipsaw signals to be minimized.
If the Sine plot crosses below the Lead Sine plot, the Sell signal is sent. A purchase signal is sent as the Sine plot crosses over the Lead Sine plot if the market is in Cycle mode. It is worth trading the Trend if the Market is in the Trend mode. Main Moving Average crossovers are often helpful for exiting and entering positions in this type of market.
This indicator tries to determine the Current phase of the Cycle you are in, has an Advantage over other oscillators such as RSI and Stochastic because it predicts rather than waits for confirmation. Sine Wave gives entry and exit signals 1/16th of a cycle period in advance of the cycle turning point and seldom gives False whipsaw signals when the Market is in a Trend mode.