Another One<\/strong><\/span><\/p>\n Who says more of a good thing is too much?\u00a0 Not us.\u00a0 Especially if it\u2019s from the guy we all love\u2026the amazing Mr. John Ehlers.\u00a0 But, this one is kind of different.\u00a0 It looks a bit strange, and actually can be used two different ways with decent results on both of them.\u00a0 Come let\u2019s take a look.<\/span><\/p>\n A Different Kind of Stochastic<\/strong><\/span><\/p>\n Every now and then, we run across an indicator that makes us stop and say, \u201cOkay\u2026that\u2019s interesting.\u201d\u00a0 The Ehlers Sine Wave Stochastic is one of those indicators.\u00a0 At first glance, it looks like another oscillator. You\u2019ve got two lines moving around a centerline, and, naturally, the first thing that comes to mind is the usual stochastic interpretation.\u00a0 But that\u2019s not really what we\u2019re interested in here.<\/span><\/p>\n Can this thing confirm a trend?<\/strong><\/span><\/p>\n We\u2019re looking at it from a somewhat different perspective.\u00a0 And more specifically, can we use it in the two ways that matter most for a confirmation indicator?<\/span><\/p>\n That\u2019s where things get interesting.<\/span><\/p>\n A Little Ehlers Magic<\/span><\/strong><\/p>\n The indicator is based on concepts developed by John Ehlers, whose work has focused heavily on applying digital signal-processing techniques to financial markets.\u00a0 If you\u2019ve spent any time looking at Ehlers indicators, you know the basic idea.<\/span><\/p>\n His-to-ry<\/span><\/strong><\/p>\n John Ehlers developed this bit of magic using digital signal-processing techniques to identify market cycles. He published the method in his 2001 book, \u201cRocket Science for Traders\u201d. It was adopted in 2014 for MT4 from an earlier 2011 version which was created for Trading View.\u00a0 And now you know the rest of the story.<\/span><\/p>\n Breaking Tradition<\/strong><\/span><\/p>\n Traditional technical indicators tend to treat price data like a simple series of numbers. Ehlers approaches the problem more like an engineer dealing with a noisy signal.\u00a0 The objective is to extract useful information about the market\u2019s underlying cycle while reducing some of the noise.\u00a0 That\u2019s the basic attraction here.\u00a0 Let\u2019s take a look at this beauty.<\/span><\/p>\n Rather than simply asking: \u201cIs price overbought or oversold?\u201d (which isn\u2019t a thing for us) we\u2019re more interested in:\u00a0 \u201cWhich way is the underlying cycle moving?\u201d\u00a0 And that\u2019s much more useful for a confirmation indicator.<\/span><\/p>\n The Two Lines<\/strong><\/span><\/p>\n The Ehlers Sine Wave Stochastic displays two lines:<\/span><\/p>\n The green line is the more responsive component, while the gold line provides the slower reference.\u00a0 This gives us our first method of generating a signal.<\/span><\/p>\n When the green line crosses above the gold line, the oscillator is indicating an upward shift.<\/span><\/p>\n When the green line crosses below the gold line, the oscillator is indicating a downward shift.\u00a0 Simple enough.<\/span><\/p>\n But There\u2019s Another Way<\/span><\/strong><\/p>\n Here\u2019s where we decided not to stop.\u00a0 Most traders looking at this indicator will probably gravitate toward the two-line crossover.\u00a0 But the green line also moves through a zero line.\u00a0 And that gives us another potential confirmation method.<\/span><\/p>\n The difference is subtle but important.\u00a0 The two-line crossover is looking at the relationship between the fast and slow components.\u00a0 The zero-line cross is looking at the directional side of the oscillator itself.<\/span><\/p>\n In other words:<\/strong><\/p>\n And that makes the indicator considerably more interesting from an algorithm-building perspective.<\/span><\/p>\n Which One Is Better?<\/span><\/strong><\/p>\n Ah, there\u2019s the million-dollar question.\u00a0 And, as usual, we\u2019re going to disappoint anybody looking for a magical answer.\u00a0 We don\u2019t know yet\u00a0 That\u2019s what testing is for.<\/span><\/p>\n The two-line crossover should generally be more responsive. Because we\u2019re watching the faster green line cross the slower gold line, the signal can occur earlier in a cycle.\u00a0 That\u2019s potentially good.\u00a0 But there\u2019s a downside.\u00a0\u00a0<\/span><\/p>\n Zero Line is Different<\/span><\/strong><\/p>\n The green line has to actually move from one side of the centerline to the other.\u00a0 That tends to produce a more conservative signal.\u00a0 The trade-off is obvious.\u00a0 Earlier signal vs. stronger confirmation.\u00a0 And that\u2019s exactly the kind of thing we want to investigate.<\/span><\/p>\n Settings<\/span><\/strong><\/p>\n Our version has three settings that are worth paying attention to\u2026and we use all of them.<\/span><\/p>\n StoPeriod:<\/b>\u00a0 This controls the lookback period used in the stochastic calculation.\u00a0 The default value is 32.<\/span><\/span><\/p>\n StoSmoothing:<\/b>\u00a0 This controls the smoothing applied to the stochastic calculation.\u00a0 The default value is 5.<\/span><\/span><\/p>\n StoPrice:<\/b>\u00a0 This determines which price component is used by the stochastic calculation. 0=Close, 1=Open, 2=High, 3=Low, 4=Median, 5=Typical, 6=Weighted.\u00a0 The default value is 0-Close.<\/span><\/span><\/p>\n Daily Maintenance<\/span><\/strong><\/p>\n Remember, once you\u2019re ready to perform daily maintenance on your trades during the last 20\u201330 minutes of the trading day (1700 New York time), you\u2019ll be presented with one of four options.<\/span><\/p>\n Sweetness<\/strong><\/span><\/p>\n We\u2019re going to provide you with two sets of data.\u00a0 When we tested it both ways, we were happy with all of the results, so we decided to post them and let you make the decision on which one you\u2019d like to use.<\/span> This first bunch of metrics are the indicator used as a two lines cross.<\/span><\/p>\n Now, here are the results with the indicator used as a zero cross.<\/span><\/p>\n Wrap It Up<\/strong><\/span><\/p>\n Normally numbers on the EUR and the SPX500 are much softer so when we saw this do really well in both instances, that was pretty much the clincher for us.\u00a0 BTC and XAU (as always) do pretty well due to the market, but overall, it\u2019s a toss-up.\u00a0 Give them both a try and see how they do with your system\u2026because you better not be trading with just one indicator.\u00a0 That would be bad, very bad.<\/span><\/p>\n Resources<\/strong><\/span><\/p>\n Ehlers take on the Stochastic can be found in our indicator library<\/a> for free, and it\u2019ll be marked with \u201cNEW\u201d in red to help you locate it quickly.\u00a0 <\/span><\/span>Be sure you\u2019re subscribed to the Stonehill Forex YouTube channel, where we\u2019ll demonstrate both ways of using it.\u00a0 <\/span>And for heaven\u2019s sake, do not neglect the Advanced NNFX Course<\/a> to help fast-track your trading education so you can get on the trading bus sooner rather than later..<\/span><\/p>\n *Our published testing results are based on the money management strategies employed by the NNFX system and depend on a variety of external factors that may differ between individuals and their specific broker conditions. No guarantees, trading recommendations, or other market suggestions are implied. Your results and subsequent trading activities remain solely your own responsibility. BTW \u2014 Any information communicated by Stonehill Forex Limited is provided solely for educational purposes. The information contained in our courses, blogs, and on our website does not constitute investment advice or a general recommendation to invest. It is not intended to be, and should not be interpreted as, investment advice or a recommendation regarding any investment or trading activity.\u00a0 Any person who places trades, enters orders, or engages in any other form of trading or investment is solely responsible for their own investment decisions and does so at their own risk. Individuals should consult an independent financial adviser before making any investment decisions.\u00a0 Stonehill Forex Limited\u2019s training courses, blogs, and other educational materials are provided for educational purposes only. Stonehill Forex Limited is not a financial advisory service and does not provide financial advice or make general investment recommendations.<\/em><\/p>\n<\/p><\/div>\n\n","protected":false},"excerpt":{"rendered":" Another One Who says more of a good thing is too much?\u00a0 Not us.\u00a0 Especially if it\u2019s from the guy we all love\u2026the amazing Mr. John Ehlers.\u00a0 But, this one is kind of different.\u00a0 It looks a bit strange, and actually can be used two different ways with decent results on both of them.\u00a0 Come […]<\/p>\n","protected":false},"author":1,"featured_media":7048288,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[127880,100346],"tags":[23089,51489,11274,35859,40619,210955,178084,2466],"dealstore":[],"offerexpiration":[],"class_list":["post-7048287","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-confirmation-indicator","category-indicator","tag-confirmation","tag-ehlers","tag-forex","tag-indicator","tag-sine","tag-stochastic","tag-stonehill","tag-wave"],"yoast_head":"\nA two-lines cross<\/span><\/h4>\n
A zero-line cross<\/span><\/h4>\n
![\"\"](\"https:\/\/stonehillforex.com\/wp-content\/uploads\/2026\/08\/Screenshot-2026-08-25-at-1.53.15-PM-1024x538.png\")
<\/a><\/p>\nGreen line<\/strong><\/span><\/h3>\n
Gold line<\/strong><\/span><\/h3>\n
Green Crosses Above Gold = LONG confirmation<\/span><\/h3>\n
Green Crosses Below Gold = SHORT confirmation<\/strong><\/span><\/h3>\n
![\"\"](\"https:\/\/stonehillforex.com\/wp-content\/uploads\/2026\/08\/Screenshot-2026-08-25-at-1.53.11-PM-1024x538.png\")
<\/a><\/p>\nGreen Crosses Above Zero = LONG confirmation<\/span><\/h3>\n
Green Crosses Below Zero = SHORT confirmation<\/span><\/h3>\n
![\"\"](\"https:\/\/stonehillforex.com\/wp-content\/uploads\/2026\/08\/Screenshot-2026-08-25-at-1.53.18-PM-1024x538.png\")
<\/a><\/p>\nTwo-line cross = earlier signal<\/strong><\/span><\/h3>\n
Zero-line cross = directional confirmation<\/strong><\/span><\/h3>\n
![\"\"](\"https:\/\/stonehillforex.com\/wp-content\/uploads\/2026\/08\/Screenshot-2026-08-25-at-1.53.20-PM-1024x538.png\")
<\/a><\/p>\nMore responsiveness\u00a0 = more false signals<\/span><\/strong><\/h3>\n
![\"\"](\"https:\/\/stonehillforex.com\/wp-content\/uploads\/2026\/08\/Screenshot-2026-08-25-at-1.52.38-PM-1024x283.png\")
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<\/a><\/strong><\/span><\/p>\nOur only goal is to make you a better trader.<\/span><\/h3>\n
<\/span><\/em><\/p>\n