The Schaff Trend Cycle is a cyclical trend oscillator that serves real-time trend reversal alerts for MT4 users.
This indicator applies two different methods for calculating the trend cycle value. First, It uses a long and a short period MA over MACD. Secondly, it applies a trend cycle period on smoothed stochastics for detecting the changes in trend directions.
Interestingly, Schaff Trend Cycle works in all timeframes and this latest version remains less reactive in choppy markets. These features have made this indicator more reliable for delivering trend-based buy/sell signals.
The Schaff Trend Cycle displays two different types of MA lines for demonstrating trend signals. The blue line represents MA-short and the red line represents MA-long. The crossover moments of these lines are defined as the trend-reversal periods of the market.
The value of the trend cycle ranges from 0 to 100. The indicator value drops to zero-level when the market is oversold. Contrarily, the value rises to 100 to signal an overbought market.
This indicator is configured with a 23-period short MA and a 50-period long MA. Its default trend cycle period is 10. The MA-short moves above the MA-long to signal a bullish crossover.
On the other hand, the MA-short moves below the MA-long indicating a bearish crossover. Please note that the crossovers need to occur at the overbought/oversold areas for making the signals more precise.
For example, MA-short moving above MA-long near the 0 level means the price is done with its current bearish move and ready to begin a bullish trend move.
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- The Trend Cycle value hits the 0 level
- The MA-short moves above MA-long
- Exit long when the indicator plots a bearish crossover signal
- The indicator value reaches 100
- MA-short crosses below the MA-long
- Exit sell orders whenever the MA lines plot a bullish crossover