Premium
SCHAFF TREND CD
Doug Schaff
FX-Strategy
| Name: | Schaff Trend CD | � |
| Characteristic: | Trend Momentum | � |
| Parameter Defaults:���� | MA1 Period | 23���� |
| � | MA21 Period | 50 |
| � | Period Len | 25 |
| Plots: | STCD | � |
| � | 0-Line | � |
The Schaff Trend CD (STCD) identifies repeated high and low patterns, or cycles, within a MACD measure of trend. STCD does this by comparing trend to a moving average of itself. The input for the STCD is the difference between two exponential moving averages (a MACD Line). The resulting oscillator measures when trend is accelerating or decelerating, showing a trend cycle.
Usage
In the chart above, turns in the STCD show Trend Cycle (TC) bottoms and tops. When the Schaff Trend CD is rising, the trend cycle is rising and prices tend to stabilize or follow the cycle higher. When the STCD is falling, the trend cycle is falling and prices tend to stabilize or follow the cycle lower.
The STCD can also be used to uncover divergence, instances where price extremes are not matched by new trend cycle extremes. In the 2-hour British Pound chart above, price makes a new high while the STCD makes a lower TC High, warning of a trend reversal, from bullish to bearish, that followed.
