Hilbert Sine Wave (Emini daily)
The Emini closed up 3.75 points at 1,437.00 on Friday. Inside day with high churn, neutral Trading Index (TRIN) and unable to break resistance at 1,438 today. The Hilbert Sine Wave pattern that started in August finally "completes" today. Check out the chart above.
FirstPB = First Pull Back and Complete = Trend Completion Pattern
Previous posts have gone into some detail about John Ehler's Hilbert Sine Wave oscillator. The pattern I see repeated again and again in multiple time frames, on multiple securities is shown on the chart above. It has several parts:
- Breakout into trend mode – the oscillator crosses and signals a cyclical turning point but the market continues in the direction it has being going (in August the Emini kept on going higher)
- Trend advance similar to an Elliott wave 3 – the oscillator lines refuse to cross and the trend mode is confirmed (lasted all the way from August to December for the Emini)
- Trend mode ends with a correcting Elliott wave 4 pattern that finishes with a cyclical turning point – I label these points "FirstPB" (or First Pull Back)
- Finally the whole pattern ends with an Elliott wave 5 and a cyclical turning point that I label "Complete"
- After the move has "completed" it can sometimes continue further until exhausted but at this stage the market has moved from trend mode into cyclical mode and stays in cyclical mode until another trend starts with another breakout
The patterns are all added to the chart automatically using TradeStation EasyLanguage. Too complicated? Maybe but it helps me identify when cyclical indicators are more likely to work than trend with pullback indicators.