The Hilbert sine wave combines the best characteristics of the oscillator and moving average. An oscillator signals over-sold and over-bought issues in a cyclical trends in the region while moving average marks the beginning and end of a trending movement.
Markets alternate between periods, when the cycling and periods when the price trending. Using a wave, the structure of the market can be defined with 5 ways:
1. cyclical turning points where value returns out of support and resistance levels almost perfectly.
2. "regions;" circular turning points where momentum causes market value exceeding the level of support or resistance before resetting the cycle
3. Breakouts from cyclical fluctuations in voltage mode, where a "overrun" maintains its evolution and the market makes a strong directional or trend move.
4. The trend move loses momentum and throw back at a turning point before resuming our inclined circular movement. and
5. The trend that ends with a final circular shift.
Improved sine wave, an adaptation of Hilbert sine wave, can be used for defining market structure in each time frame: tick lines, minutes, hourly, daily, weekly, or monthly. It can also be used for any market: futures, stocks, forex, indices or options. To use this technique with multiple timeframes, you must understand that the trend will move to a lower time frame are the circular motion in a larger timeframe. The Wave is uniquely suited for use on multiple timeframes as this provides circular bends and the end of trending periods.
A key question to answer with Hilbert sine wave is whether to "observe" the level of support or resistance, or "overrun" and maybe even become a trend to move your value instead? These bends high probability can be identified by looking for two things: bends corresponds to higher cycle timeframes and volume confirmation patterns.
Using improving sine wave can make all the difference to your trading.
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