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SCHAFF TC1 INDICATOR
Doug Schaff
FX-Strategy
| Name: | Schaff TC1 | |
| Characteristic: | Trend Momentum | |
| Parameter Defaults: | TC Period | 10 |
| MA1 Period | 23 | |
| MA2 Period | 50 | |
| Period Len | 25 | |
| Plots: | TC1 | |
| 30-Line | ||
| 70-Line |
The Schaff TC1 is a measure of trend momentum, similar to the Schaff Trend Cycle. Whereas the input for the Schaff Trend Cycle is a MACD Line, the input for the TC1 is the Schaff Trend CD (See definition of Schaff Trend CD), an overbought/oversold measure of a MACD Line. The input is run through a proprietary stochastic algorithm. The resulting oscillator measures when trend is accelerating or decelerating, showing a cycle measure of trend.
The 30-minute USDCHF chart above shows a yellow Schaff Trend Cycle in the middle chart panel and a blue Schaff TC1 indicator in the lower panel. Both are measures of trend momentum, but since each uses a different input, the resulting oscillators can vary.
Usage
When the TC1 is falling, trend momentum is falling and prices tend to stabilize or follow the trend cycle lower. When the TC1 is rising, trend momentum is rising and prices tend to stabilize or follow the trend cycle higher.
Dotted buy and sell lines are drawn in the TC1 chart panel. The indicator rising above the buy line can be used to confirm trend cycle lows. The indicator falling below the sell line can be used to confirm trend cycle peaks.
The TC1 can be placed in the same chart panel as the STC to make it easier to see when both are rising or falling. Long positions can be considered when both are rising or flat above 90. Short positions can be considered when both are falling or flat below 10.
A powerful way to use trend cycles is in combination with a Trend Direction indicator. For example, the TC1 and FXS-Adaptive Moving Average (FAMA) have been applied to the 30-minute USDCHF chart, below.
When price is below the black FAMA line and FAMA is falling, then a TC1 that is falling or flat below 10 would indicate further price declines. When price is above FAMA and FAMA is rising, a TC1 that is rising or flat above 90 would indicate additional price increases.
