Schaff Trend Cycle Indicator: MACD + Smoothed Stochastic Oscillator
Trading indicator SchaffTrendCycle is a cyclic oscillator, created by calculating the stochastic stochastic (2 times) MACD line, using cycles. The result is improved version of the oscillatorIt was developed by Doug Schaff, who suggested that currency trends accelerate and decelerate cyclically. It was developed by Doug Schaff, who suggested that currency trends accelerate and decelerate cyclically. His algorithm was published in 2008. Schaff Trend Cycle attempts to combine two different approaches to determining trend directions - MACD and smoothed stochastic oscillator. The value of the indicator ranges from 0 to 100. Two key levels are used - 25 and 75.
Input parameters
- MAShort (default = 23) - the period of the fast moving average for calculating the MACD line. It must be less than the MALong.
- MALong (default = 50) - the period of the slow moving average for calculating the MACD line. Must be greater than MAShort.
- Cycle (default = 10) - the length of the cycle in periods of the graph. As a result, the cycle is used twice as long, because the two stochastics are calculated sequentially.
ForTrader magazine experts believe that the easiest and most obvious way to trade using this indicator is to sell when the line falls below the 75 level and to buy when it rises above the 25 level.
To filter out more false signals, Doug Schaff (author of Schaff Trend Cycle) suggests the following method: for the buy signal - barfollowing the crossover bar, should close above the maximum level of the crossover bar; for the sell signal - The bar following the crossover bar must close below the minimum level of the crossover bar. A crossing bar is a bar formed during an indicator crossing with the 25 or 75 levels.