Ehlers’ Even Better Sinewave as a Cycle Momentum Filter

Summary

The Even Better Sinewave is described as a bounded oscillator for identifying bullish or bearish cycle momentum while filtering price noise. Its construction applies a high-pass stage to price changes, then smooths the result with a low-pass filter. A normalized combination of recent filtered values forms the oscillator. The document gives default overbought and oversold levels of 0.85 and -0.85, along with parameter examples for the filter duration and lower band.

The indicator is attributed to John Ehlers and linked to his cycle analysis work. Its intended use is as a filter alongside other analysis, rather than as a standalone trading signal. Smoothing can introduce lag, so turning points may be recognized after they occur. The document provides an indicator description and formula but no market examples, tests, or evidence that the thresholds work across instruments or timeframes. Users would need to assess its behavior and parameter sensitivity on their own data.

Key ideas

• The indicator filters price changes to emphasize cyclical momentum while reducing noise.
• It normalizes recent filtered values into a bounded oscillator.
• The stated default overbought and oversold levels are 0.85 and -0.85.
• Filtering may introduce lag, so the oscillator is intended as a supporting filter rather than a standalone signal.
• The document gives no empirical testing across markets or timeframes.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.