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Chart – Sine Wave

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Conceived by John Ehlers in 1996, it is used to highlight whether the stock is in a trend phase or in a cycle.

It is composed of two graphs: the Sine Wave which measures the phase, the Lead Sine, which increases it by 45 degrees. Together the curves give indications on the state: in defined trend or not in trend.

A buy signal comes when the Sine Wave crosses the Lead Sine, a sale signal when the Sine Wave crosses the Lead Sine at the bottom. The best indications are when crosses occur in the overbought / oversold areas.

In trend phases the indicator will move at lateral intervals around zero and the two curves will not cross.