      For over 50 years the non-profit Foundation for the  Study  of  Cycleshas been using a simple procedure called  centered  detrending  to  identifycycle lengths in all natural phenomena,  including  economic  activity.  Theadvantage  of  centered  detrending  over  Fourier  analysis  and   Spectralanalysis is that you can visibly observe the historical  cycle  bottoms  andtops. This takes the “mystery” out of cycle trading and analysis.  When  youcan look  back  over  20  years  of  price  history  and  actually  see  theconsistency and tradability of cycles, it is easy to have the confidence  totrade them. After all, if you cannot see cycles in price  activity  how  canyou put your money on the line to buy a bottom or sell a  top.  We  are  notlooking to trade the big bottoms and tops that occur as the trend  reverses,but the bottoms and  tops  of  the  shorter-term  cycles  occurring  in  thedirection of TREND.
The process to detrend a cycle is simple.   1. Calculate a moving average the same length as  the  potential  Trading      Cycle.  For most markets use a 20-bar moving average of the close. But      instead of plotting  the  moving  average  on  the  day  of  the  last      calculation, it is centered (or plotted) in the middle of  the  cycle.      For example, the 20-day moving average is plotted back  10  days  from      the most recent close. This is called a centered moving average as  it      is plotted in the center of the cycle.
   2. Subtract the moving average from the high and low of  each  price  bar      and plot the results around a zero line directly below each price bar.      The zero line represents the centered 20-bar moving average.   3. The centered detrend at the bottom of Chart 3 mitigates the effects of      trend and allows the highs and lows of the trading cycle to be  easily      seen.   This process can be easily programmed into many of  the  popular  trading   platforms.  The  two  indicators  for  this  detrending  process  can  be   downloaded  from  our  website  Download  Page   for   TradeStation   and   SuperCharts users – WB_Cen-MA  indicator,  which  calculates  the  moving   average and centers it back one-half the length of the cycle as  in  Step   1. The actual centered detrend is plotted by the WB_CenDetrend  indicator   as in Step 2.