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Schaff Trend Cycle

www.cmsfx.comDeveloped by Doug Schaff in the 1990's, the Schaff Trend Cycle bases its method on the fact that trends, like price, exhibit repeating high and low patterns (cycles). This indicator is a modified MACD line run through a mofidied stochastic algorithm smoothed with Wilders' smoothing to calculate the final STC indicator.

Interpretation

The Schaff Trend Cycle uses three inputs:

· Sh: Shorter-term Exponential Moving Average. Default: 23
· Lg: Longer-term Exponential Moving Average. Default: 50
· Cycle: Set at half the cycle length. Default: 10

The Schaff Trend Cycle helps to identify:

1. Direction a Trend Cycle is moving.
2. Tops and Bottoms within a Trend Cycle.

When the Schaff Trend Cycle Indicator is declining, the trend cycle is falling and prices tend to stabilize or follow the cycle down. When the STC is rising, the trend cycle is rising and prices tend to stabilize or follow the cycle higher..

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