Chart – Sine Wave
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.