Sinewave Indicator

What is the Sinewave Indicator?

The Sinewave Indicator is John Ehlers' cycle-timing tool. Instead of smoothing price the way a conventional oscillator does, it estimates the phase of the market's dominant cycle (see dominant cycle measurement, classically done with the Hilbert Transform) and plots two lines: the sine of that phase, and a lead line, the sine of the phase advanced by 45 degrees. When price is genuinely cycling, the two lines cross close to cycle troughs and crests, so turns register with little of the lag a fixed-length oscillator carries.

Its second property is just as useful: trend detection by silence. In a trending market the phase stops advancing at a steady rate, and the sine and lead lines flatten out and run roughly parallel without crossing. Active, regular crossings say the market is cycling and turn-timing applies; a quiet, uncrossed pair says the market is trending and cycle signals should be stood down. The indicator only anticipates turns when a reasonably stable cycle actually exists, which is why implementations condition the input first.

How traders use it

• Timing cycle turns in ranges: crossings of the sine and lead-sine lines flag expected troughs and crests of the measured cycle, so mean-reversion entries can be taken toward the opposite extreme rather than after a lagging oscillator confirms.
• As a trend/cycle regime filter: when the two lines stop crossing and run parallel, the market is treated as trending and cycle-based fade signals are disabled. Some traders use the indicator purely for this mode call.
• With conditioned input: the phase estimate degrades when trend and noise leak into the measurement, so implementations typically detrend or bandpass price first (a roofing filter is the standard Ehlers preprocessing) before computing the sinewave.