Although this indicator has similarities to . It is better used to identify the cycle of High and Lows based on the Statistical Data (Default is set to 25).
**** DO NOT USE THIS AS A ****
As a word of caution the read this - http://bit.ly/1Arjoqp. This is a rip off, if you choose to pay a penny.
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in a publication is governed by House Rules. You can favorite it to use it on a chart.
// Created by UCSgears // Version 1 - Setting for the Power cycle is not determined yet. This is the concept. // Larry Gaines version of Cycle uses Linear Regression study(title="UCS_Cycle_V1", shorttitle="UCS-Cycle", overlay=false) // Classic Cycle Indicator uses SMA UseLinearRegression = input(true) PlotSignal = input(false) // The Source can be Based on OHLC4 or HL2 src = (ohlc4) len = input(25, title="Cycle Length") smooth = input (8, title = "Signal") basis = UseLinearRegression ? linreg(src, len, 0) : sma(src,len) cycle = close - basis cyclesig = PlotSignal ? ema(cycle,smooth) : 0 plot_color1 = cycle > 0 ? green : red plot(cycle, color = plot_color1, title = "Linear Regression Curve", style = columns, linewidth = 4) plot(cyclesig, color = gray, title = "Signal") //END // Version 2 will have all the settings for the 3 Power Cycle Bands with Options to Plot them all.
Here i offer how I would use the Cycles indicator, divergence bars everywhere if you know how to look for them. The focus on this image is just highlighting the Cycle bars which are counter trend. Reading from left to right we have one Sell, one Buy, one more Buy (short term) as this morphs into a Divergent Breakout and then the Divergent Breakout turns into a Bearish Breakout as the Cycle histogram breaches the low of the previous bearish Cycle low, very clear Sell signal. All based on the most import aspect of this indicator, the Signal line !!! Regression to the mean at its best. Very similar to the Awesome Oscillator with Signal but superior at pinpointing divergent price bars