Using a Three-EMA Wave Indicator to Classify Market Cycles

Summary

This indicator translates Raghee Horner’s market-cycle concept into a visual classification based on EMA 34 applied to highs and lows. A close above the high-based average marks an uptrend; a close below the low-based average marks a downtrend; a close between the two marks consolidation. The indicator displays these states as green, pink, and absent bars, respectively, and treats three consecutive bars of one color as confirmation.

The document explains the calculation and interpretation but gives no trading rules for entries, exits, sizing, or risk controls. It reports no backtest or performance evidence, so the indicator’s ability to identify useful trends is not established here. It is presented as an implementation of a concept from a forex trading book, rather than a tested standalone strategy.

Key ideas

• The indicator uses EMA 34 on highs and lows to define a band for classifying market state.
• A close above the upper average signals an uptrend, while a close below the lower average signals a downtrend.
• A close inside the band represents consolidation.
• Three consecutive bars with the same trend color confirm the displayed direction.
• The document provides no performance testing or complete trading system.

Tags

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