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Forex Schaff Trend Cycle Indicator for MT4
Introduction to the Schaff Trend Cycle Indicator
What goes up must come back down. The same law of gravity also applies in price movements. However, timing such reversals can be quite difficult.
Let us explore the Schaff Trend Cycle indicator which was developed for the purpose of identifying trend or momentum reversals.
What is the Schaff Trend Cycle Indicator?
The Schaff Trend Cycle indicator is a momentum or trend following indicator which is also an oscillator type of indicator. It provides indications of an overbought or oversold price level, as well as reversal signals coming from such overbought or oversold price levels.
It plots a rather smooth line which oscillates within the range of zero to 100. Schaff Trend Cycle indicators also typically have markers at levels 25 and 75. The area below 25 indicates oversold market levels, while the area above 75 indicates overbought market levels.
How the Schaff Trend Cycle Indicator Works?
The Schaff Trend Cycle uses an underlying pair of Exponential Moving Averages (EMA) to determine its trend direction. It also adds a smoothing effect on its computation in order to decrease its susceptibility to false signals and increase accuracy. Aside from this, the Schaff Trend Cycle indicator incorporates the number of periods within its computation as a means to determine the market’s cyclical movements.
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