Direct Answer
The Even Better Sinewave is a John Ehlers indicator that high-pass filters price, smooths it with a Super Smoother, and divides a 3-bar average of the result by the square root of its 3-bar average power. The output is bounded between -1 and +1 and behaves like a sine wave when a cycle is present. Readings near +1 or -1 are the cycle extremes, and zero crossings mark the midpoints.
Even Better Sinewave: Formula, Meaning, Signals, Examples and How to Use It
How Is Even Better Sinewave Calculated?
The Even Better Sinewave is a John Ehlers indicator that high-pass filters price, smooths it with a Super Smoother, and divides a 3-bar average of the result by the square root of its 3-bar average power. The output is bounded between -1 and +1 and behaves like a sine wave when a cycle is present.
Formula: Wave = (Filt + Filt[1] + Filt[2]) / 3; Pwr = (Filt^2 + Filt[1]^2 + Filt[2]^2) / 3; EBSW = Wave / sqrt(Pwr)
Inputs:
- Close prices
- High-pass cutoff period (for example 40 bars)
- Super Smoother cutoff period (for example 10 bars)
Worked example. With three consecutive filtered values of 0.8, 0.5 and 0.2, the normalized wave value is 0.898. The inputs are illustrative numbers, not market data.
Reading it. Readings near +1 or -1 are the cycle extremes, and zero crossings mark the midpoints. Because the amplitude is normalized, the display always fills the range, so the height of the wave says nothing about how strong the cycle is.
Limits. Normalization makes noise look like a clean wave, so a bounded smooth line can appear when no real cycle exists. It also lags turns by the smoothing used.
What is Even Better Sinewave?
The Even Better Sinewave is a John Ehlers indicator that high-pass filters price, smooths it with a Super Smoother, and divides a 3-bar average of the result by the square root of its 3-bar average power. The output is bounded between -1 and +1 and behaves like a sine wave when a cycle is present.
How to use Even Better Sinewave
Readings near +1 or -1 are the cycle extremes, and zero crossings mark the midpoints. Because the amplitude is normalized, the display always fills the range, so the height of the wave says nothing about how strong the cycle is. A reading alone is never a buy or sell signal; it needs context from price structure, volume, volatility and the broader market regime.
Strengths
- Dividing by the root of the 3-bar average power forces the output into a fixed -1 to +1 band without separate amplitude tracking.
- Pre-filtering with a high-pass and a Super Smoother removes trend and noise first, so the normalization works on a cleaner, band-limited series.
- Reproducible when the formula and data convention are fixed.
Weaknesses and limitations
- The averaging is over only three bars, so the power estimate reacts immediately and the normalization can swell small wiggles to full amplitude.
- Because the amplitude is always rescaled, the output does not show whether the cycle behind it is strong or faint, so cycle size is discarded.
- Correlated indicators can create false confidence by repeating the same underlying information.
Editorial and risk note
This page is educational content, not individualized investment advice. It should not imply guaranteed prediction, accuracy or outperformance.
Frequently Asked Questions
Is Even Better Sinewave a buy or sell signal?
No. Readings near +1 or -1 are the cycle extremes, and zero crossings mark the midpoints. Normalization makes noise look like a clean wave, so a bounded smooth line can appear when no real cycle exists. A trade built on it still needs a trigger, an invalidation rule, a position size and realistic execution assumptions.
What is the best setting for Even Better Sinewave?
Even Better Sinewave takes these inputs: close prices; high-pass cutoff period (for example 40 bars); super Smoother cutoff period (for example 10 bars). There is no universal best setting for the tunable ones, so test them across instruments, regimes and out-of-sample periods and favor stable parameter regions over one historical winner.
Can Even Better Sinewave be used by itself?
Normalization makes noise look like a clean wave, so a bounded smooth line can appear when no real cycle exists. It also lags turns by the smoothing used. For that reason it is read next to measures of direction, participation, valuation, liquidity and risk, not alone.
Does Even Better Sinewave work on every timeframe?
The calculation (Wave = (Filt + Filt[1] + Filt[2]) / 3; Pwr = (Filt^2 + Filt[1]^2 + Filt[2]^2) / 3; EBSW = Wave / sqrt(Pwr)) can be run on any bar size, but behavior is not portable: a reading on a five-minute chart describes a very different market window from the same reading on a daily chart. Validate the exact timeframe before relying on it.
Why does Even Better Sinewave give false signals?
The averaging is over only three bars, so the power estimate reacts immediately and the normalization can swell small wiggles to full amplitude. Because the amplitude is always rescaled, the output does not show whether the cycle behind it is strong or faint, so cycle size is discarded. Lag, noise and regime changes add to this, because market participants react to new information after the reading is calculated.
How should Even Better Sinewave be backtested?
Rebuild Even Better Sinewave from close prices using point-in-time data, write the rules before testing, include delisted securities where relevant, model realistic fills and costs, reserve a validation sample and compare with a simpler baseline.