[blackcat] L2 Fourier Series Analysis

14 Jul 2022

Level 2

Background

John Ehlers’ articles in the July issues on 2019,“Fourier Series Model Of The Market”.

Function

In “Fourier Series Model Of The Market” in this issue, author John Ehlers introduces a Fourier series indicator designed to help traders identify cycles in the market. According to the author, the approach based on five principles outlined by J.M. Hurst in his 1970 book allows the determinization of a security’s primary cycle period and gives a faithful picture of market activity.

Remarks

You have to adjust Entry_TH value for different time frames.

Feedbacks are appreciated.

Nota Keluaran

OVERVIEW
The [blackcat] L2 Fourier Series Analysis indicator applies Fourier series techniques to analyze market cycles and trends. This advanced tool decomposes price data into its constituent harmonics, providing insights into underlying patterns and potential turning points. By plotting the reconstructed wave and its rate of change, traders can identify key moments for entering or exiting positions 📊🌐.

FEATURES

Analyzes price data using Fourier Series decomposition:
Breaks down price movements into fundamental and harmonic components.
Computes the power of each harmonic to understand their significance.
Plots the reconstructed Wave and its Rate of Change (ROC):
Wave: Yellow area representing the combined harmonic signal.
ROC: Fuchsia line indicating the rate at which the wave is changing.
Generates buy ('B') and sell ('S') labels based on crossover events with the Entry Threshold:
Buy signals when ROC crosses above the threshold.
Sell signals when ROC crosses below the threshold.
Includes customizable inputs for fine-tuning analysis:
Fundamental Period: Base period for harmonic analysis.
Entry Threshold: Level at which signals are generated.
HOW TO USE

Add the indicator to your TradingView chart by selecting it from the indicators list.
Adjust the Fundamental Period and Entry Threshold parameters to suit your preferences ⚙️.
Monitor the plotted wave and ROC lines for visual cues about market momentum.
Observe the buy ('B') and sell ('S') labels for potential trade opportunities.
Set up alerts based on the generated signals to receive notifications when conditions are met 📲.
LIMITATIONS

The indicator's effectiveness may vary depending on the asset and timeframe being analyzed.
Complex calculations might require significant computational resources.
Users should combine this indicator with other forms of analysis for more reliable trading decisions.
NOTES

Ensure that you have sufficient historical data available for accurate Fourier analysis.
Test the indicator thoroughly on demo accounts before applying it to live trading 🔍.
Customize the appearance and parameters as needed to fit your trading strategy.