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Understanding Core Concepts

While traditional WaveTrend indicators rely heavily on overbought/oversold conditions and single-timeframe divergences, Wavetrend 3D redefines the landscape by stitching together multiple “speeds” (or timeframes) into one harmonized view. Below, we break down key ideas powering Wavetrend 3D.

Multi-Timeframe Oscillators

Why “3D” Matters

Markets don’t move in purely 2D. Trend shifts on a 4-hour chart can overshadow signals on a 1-hour chart. Wavetrend 3D addresses this by blending three oscillators:

  • Fast (e.g., ~6-hour on a 12-hour chart)
  • Normal (the main timeframe, e.g., 12-hour)
  • Slow (a broader perspective, e.g., daily)
Multi Oscillator Lines
Fig 1: Separate fast, normal, and slow oscillators on different timeframes.

This reveals how multiple timeframes intersect, highlighting when fast and normal align or conflict with the slow oscillator.

Small Circles & Big Circles

Small Circles (Fast vs. Normal Crosses)

Small circles appear when the fast oscillator crosses the normal oscillator:

  • Red Circle Above Zero: Potential bearish correction.
  • Green Circle Below Zero: Potential bullish reversal.
Small Circles Example
Fig 2: Fast crosses normal above zero, generating a small red circle signal.
Small Circles Below Zero
Fig 3: Fast crosses normal below zero, generating a small green circle signal.

Big Circles (Potential Trigger Waves)

Big circles mark a possible divergence wave—often a reduced-amplitude crossover compared to a prior wave. These can precede stronger moves.

Big Circles Example
Fig 4: A bullish trigger wave forming at lower amplitude than a prior bearish wave.

Mirrored Mode

Mirroring signals across zero provides an alternate lens: bullish oscillations reflect upward, bearish oscillations invert downward.

Mirrored Overview
Fig 5: Mirrored mode for a different perspective on oscillator alignment.
Mirrored Bubbles
Fig 6: Identifying smaller bullish/bearish “bubbles” within a larger wave.

Divergence detection can also become clearer in mirrored space.

Mirrored Divergence
Fig 7: A smaller mirrored wave relative to its predecessor often signals an upcoming reversal.

EMA & CoG Smoothing

Exponential Moving Average (EMA)

By default, Wavetrend 3D has optional EMA smoothing. Increasing the EMA Length offers stronger noise reduction, at the cost of slight delay.

EMA Panel
Fig 8: Adjusting EMA length to smooth the oscillators further.

Center of Gravity (CoG)

CoG is a zero-lag, adaptive smoothing method. Its drastic look can often highlight inflection points earlier.

CoG Panel
Fig 9: CoG smoothing giving a different waveform shape compared to EMA.

Speed to Emphasize

Select which oscillator (fast, normal, or slow) to emphasize. You can bold it or adjust the width for visual clarity.

Speed Emphasize
Fig 10: Emphasizing the slow oscillator to spot major regime shifts.

Crossing the zero line on the slow oscillator can signal a strong trend change.

Zero Cross Examples
Fig 11: Slow oscillator zero-cross events typically mark significant shifts.

Kernel Estimators

Kernel estimators—particularly Display Kernel Moving Average or Display Kernel Signal—help detect trend bias with minimal lag.

Kernel Estimator
Fig 12: A kernel ribbon changing colors can signal volatility spikes or market indecision.

Frequent color changes often correlate with a ranging market.

Kernel Ranging Example
Fig 13: Rapid color shifts generally indicate sideways, choppy price action.

Overbought & Oversold Zones

Since Wavetrend 3D’s oscillators map between -1 and +1, zones around ±0.5 highlight extremes occurring in < 25% of conditions. These aren’t guaranteed “sell” or “buy” triggers—especially if the market transitions to a strong trend—but they’re valuable reversal zones.

OB OS Zones
Fig 14: Overbought/oversold thresholds mapped at ±0.5 within a -1 to +1 scale.

Practical Applications

  1. Trend Reversals: Watch the slow oscillator crossing zero.
  2. Multi-Timeframe Confirmation: Align small, normal, and slow oscillators for stronger signals.
  3. Divergences: Large circle signals often front-run powerful reversals.
  4. Mirrored Mode Insights: Identify smaller bullish or bearish “bubbles” inside a larger opposing wave.
  5. Risk Management: Combine Wavetrend 3D with other analysis forms; trailing stop-losses can be keyed to major oscillator pivot points.