Hilbert Sine Wave discussion today and apologies to readers who are not interested in the Sine Wave – I couldn’t trade without it, but I know it’s not for everyone.

After Wednesday’s large range, trending day I was expecting Thursday to be a lower range, cyclical day. That’s what we got and on days like these you’re best fading breakouts and relying on oscillators for your entry signals.

My favorite oscillator is the Hilbert Sine Wave (which shows trends too – but that’s another story) and I thought it might be helpful to show how I use it with multiple time frames.

I use 3 tick-based time frames for my day trades:

• Lowest time frame is 233 tick for fine tuning entries
• Primary time frame is 699 tick (3x higher) as the "anchor point"
• Highest time frame is 2,097 tick (3x higher again) to show the trend

I choose entry points based on the Hilbert Sine Wave support / resistance levels and how they’re interacting on the 3 time frames. I also use volume signals for confirmation but I don’t want to complicate the example below.

One pattern that re-occurs is when you get an cyclical turning point in the highest time frame along with an "end of trend" signal in the lowest time frame. Here are the charts:

Hilbert Sine Wave (Emini 233 tick)

In the lowest time frame (233 tick) we get an "end of trend" signal using the Hilbert Sine Wave. This is when we have a break into trend which is then followed by a final cyclical turn that equates to an Elliott 5th wave. If you want a better explanation, please check out the Hilbert Sine Wave video.

Hilbert Sine Wave (Emini 2,097 tick)

Then looking at the highest time frame (2,097 tick) this coincided with a cyclical turning point on the Hilbert Sine Wave. The middle time frame will often have a cyclical turn or slight overshoot – in this case it was a cyclical turn, but I’ve not included the chart.

This was a nice entry, around 1,391 which was good for about an 8 point move. Again the top of the move was signaled with the Hilbert Sine Wave in the 2,097 tick time frame.

Good luck with your Emini trading.

The Emini closed up 2.75 points at 1363.00 today. Almost an inside day – the low was exactly the same as yesterday (1,351.25) and we couldn’t break yesterday’s high. Volume was also slightly less than yesterday.

On my Emini swing trades my primary time frame is the 135 minute chart (3 equal bars per trading day). I’m also looking at one time frame higher and one time frame lower. The higher time frame is the daily chart, the lower time frame is the 45 minute chart. Both are a factor of 3 larger and smaller than the primary time frame.

If you use the Hilbert Sine Wave, you’ll notice that the cycles in different time frames often conflict. And that’s the situation we have at the moment.

Multiple Time Frame (Emini daily)

In the daily time frame we’ve broken above resistance and held for 7 days. Usually if we hold for several days above resistance an up trend move gets underway – but we should have broken out by now.

Multiple Time Frame (Emini 135 minute)

In the 135 minute time frame the cyclical low turning point yesterday looked good. This morning we had a large volume advance in the morning but we couldn’t get above 1,370 – we might have run out of buyers. A break below 1,351 (the low of the high volume bar) would confirm this.

Multiple Time Frame (Emini 45 minute)

Lastly in the 45 minute time frame, we’ve had a break below support and a pull back to that support level (1,366.50). This move needs to get resolved and finish with a cyclical low turning point.

One of these time frames will become dominant and the market start to move in synch again. Right now we have no demand above 1,370 and no supply below 1,350. Fridays tend to be larger range days – so we’ll probably find out tomorrow which direction the Emini is going in.

Meanwhile I’m still short based on a system trade. Good luck with your Emini trading.

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I use Multiple Time Frames in my Emini trading. My primary time frame for intermediate term moves in the 135 minute chart (exactly 3 equal length bars per trading day). However, I am always looking at the lower and higher time frames. The next time frame down is the 81 minute chart (exactly 5 equal length bars per trading day) and the next time frame up is the daily chart.

Multiple Time Frames – 81 minute chart

The 81 minute Emini chart above shows that we have completed the down trend move that started on 20 July 2007. The move starts with a break into trend and finishes with a final pull back and exhaustion move on 6 August 2007. All these turning points are identified with John Ehlers Hilbert Sine Wave and the "End" label is plotted automatically. The recent low around 1,440 was pin pointed quite nicely.

Checking the higher time frame …

Multiple Time Frames – 135 minute chart

However, on the next time frame up (135 minutes) we are yet to see this same exhaustion move. The break down was also identified on 20 July 2007 in this time frame – a case where two signals coincided in multiple time frames. On the chart above the Hilbert Sine Wave is yet to cross and signal the final exhaustion move down. This afternoon’s high volume and long-legged doji candlestick pattern may signal this turning point is close.

My apologies for the recent email and RSS distribution glitches. The site is being re-skinned and it takes a while to discover all the bugs in the new theme. Good luck with your Emini trading and using Multiple Time Frames.