Stochastic Oscillator

The Stochastic Oscillator is an indicator used in technical analysis of financial markets, developed by Dr. George Lane in the late 1950’s. It functions as a momentum-based indicator, which aims to determine support and resistance levels by way of oversold and overbought zones.This indicator also compares to an instrument’s price closed in relation to its price range over a specific period of time. How to Use the Stochastic OscillatorThe Stochastic Oscillator consists of two lines – the main line, referred to as %K and a second derived line, known as the signal line, and referred to as %D, which is basically a moving average of the first main line. These two lines, the %K and %D oscillate up and down within a fixed range, from 0 to 100. Most traders use the default oversold and overbought levels of 20 and 80 respectively, and the most basic use is as follows.If the Stochastic Oscillator’s two lines are below the 20 level, then the instrument is considered to be oversold and look for possible bullish movement. By extension, if the two lines are above the 80 level, then the instrument is considered to be overbought, so look for possible bearish movement. As a result, traders often use the Stochastic Oscillator to predict turning points before they happen. Indeed, the developer of the indicator, Dr. George Lane himself explained, "Stochastics measures the momentum of price. If you visualize a rocket going up in the air – before it can turn down, it must slow down. Momentum always changes direction before price."Today the Stochastic Oscillator is a very popular indicator amongst technical traders in virtually all markets, such currency, commodities and stocks.How to Trade Stochastic Oscillator?As mentioned above, traders use the indicator to gauge whether the market is oversold or overbought. A popular method to use the Stochastic is to combine four events:Look for whether the oscillator has exceeded oversold/overbought levels.Look for a change in direction of both the %K and %D lines.Look for a crossing of the %K with the %D.Look for the Oscillator to exit the oversold/overbought zones. As soon as these conditions are met, traders may look to enter the market.
The Stochastic Oscillator is an indicator used in technical analysis of financial markets, developed by Dr. George Lane in the late 1950’s. It functions as a momentum-based indicator, which aims to determine support and resistance levels by way of oversold and overbought zones.This indicator also compares to an instrument’s price closed in relation to its price range over a specific period of time. How to Use the Stochastic OscillatorThe Stochastic Oscillator consists of two lines – the main line, referred to as %K and a second derived line, known as the signal line, and referred to as %D, which is basically a moving average of the first main line. These two lines, the %K and %D oscillate up and down within a fixed range, from 0 to 100. Most traders use the default oversold and overbought levels of 20 and 80 respectively, and the most basic use is as follows.If the Stochastic Oscillator’s two lines are below the 20 level, then the instrument is considered to be oversold and look for possible bullish movement. By extension, if the two lines are above the 80 level, then the instrument is considered to be overbought, so look for possible bearish movement. As a result, traders often use the Stochastic Oscillator to predict turning points before they happen. Indeed, the developer of the indicator, Dr. George Lane himself explained, "Stochastics measures the momentum of price. If you visualize a rocket going up in the air – before it can turn down, it must slow down. Momentum always changes direction before price."Today the Stochastic Oscillator is a very popular indicator amongst technical traders in virtually all markets, such currency, commodities and stocks.How to Trade Stochastic Oscillator?As mentioned above, traders use the indicator to gauge whether the market is oversold or overbought. A popular method to use the Stochastic is to combine four events:Look for whether the oscillator has exceeded oversold/overbought levels.Look for a change in direction of both the %K and %D lines.Look for a crossing of the %K with the %D.Look for the Oscillator to exit the oversold/overbought zones. As soon as these conditions are met, traders may look to enter the market.

The Stochastic Oscillator is an indicator used in technical analysis of financial markets, developed by Dr. George Lane in the late 1950’s.

It functions as a momentum-based indicator, which aims to determine support and resistance levels by way of oversold and overbought zones.

This indicator also compares to an instrument’s price closed in relation to its price range over a specific period of time.

How to Use the Stochastic Oscillator

The Stochastic Oscillator consists of two lines – the main line, referred to as %K and a second derived line, known as the signal line, and referred to as %D, which is basically a moving average of the first main line.

These two lines, the %K and %D oscillate up and down within a fixed range, from 0 to 100.

Most traders use the default oversold and overbought levels of 20 and 80 respectively, and the most basic use is as follows.

If the Stochastic Oscillator’s two lines are below the 20 level, then the instrument is considered to be oversold and look for possible bullish movement.

By extension, if the two lines are above the 80 level, then the instrument is considered to be overbought, so look for possible bearish movement.

As a result, traders often use the Stochastic Oscillator to predict turning points before they happen. Indeed, the developer of the indicator, Dr. George Lane himself explained, "Stochastics measures the momentum of price.

If you visualize a rocket going up in the air – before it can turn down, it must slow down. Momentum always changes direction before price."

Today the Stochastic Oscillator is a very popular indicator amongst technical traders in virtually all markets, such currency, commodities and stocks.

How to Trade Stochastic Oscillator?

As mentioned above, traders use the indicator to gauge whether the market is oversold or overbought. A popular method to use the Stochastic is to combine four events:

Look for whether the oscillator has exceeded oversold/overbought levels.

Look for a change in direction of both the %K and %D lines.

Look for a crossing of the %K with the %D.

Look for the Oscillator to exit the oversold/overbought zones. As soon as these conditions are met, traders may look to enter the market.

Technical Analysis

Russell 2000 technical analysis and trade idea (Long)

Russell 2000 technical analysis

Russell 2000 technical analysis and trade idea (Long)

  • An interesting spot for a Long trader, even with near term partial profit taking.
Itai Levitan
Itai Levitan
Tuesday, 30/08/2022 | 05:17 GMT-0
30/08/2022 | 05:17 GMT-0
Education

FxGrow: Multi-Asset Trading Made Easy

fxgrow

FxGrow: Multi-Asset Trading Made Easy

  • FxGrow makes trading simple with the most powerful trading platforms available on the market.
ForexLive
ForexLive
Thursday, 25/08/2022 | 11:36 GMT-0
25/08/2022 | 11:36 GMT-0
Technical Analysis

Bitcoin technical analysis and trade idea follow-up: Respect the 20 day EMA

Signs during a trade: 20 EMA

Bitcoin technical analysis and trade idea follow-up: Respect the 20 day EMA

  • During our trade, we should watch for signs that align with our directional plan.
Itai Levitan
Itai Levitan
Wednesday, 17/08/2022 | 05:59 GMT-0
17/08/2022 | 05:59 GMT-0
Technical Analysis

Bitcoin technical analysis & trade idea (updated! See why we are aborting)

Bitcoin technical analysis

Bitcoin technical analysis & trade idea (updated! See why we are aborting)

  • See the previous technical analysis of BTCUSD and the trade idea to short it. Since then, relative technical strength from ETHUSD and an anticipation that this may lead to a rally in crypto, led to aborting the trade idea with a small loss. Traders can follow the trade idea and update to see an example of being agile in trading and cutting your losses short, in light of new technical evidence, even if it relates to a parallel asset that should affect your trade.
ForexLive
ForexLive
Saturday, 06/08/2022 | 20:41 GMT-0
06/08/2022 | 20:41 GMT-0
Technical Analysis

Ethereum technical analysis

Ethereum technical analysis

Ethereum technical analysis

  • ETHUSD is fighting with the $1700 key price. The technical analysis video shows what can come next
ForexLive
ForexLive
Sunday, 31/07/2022 | 10:06 GMT-0
31/07/2022 | 10:06 GMT-0
!"#$%&'()*+,-./0123456789:;<=>?@ABCDEFGHIJKLMNOPQRSTUVWXYZ[\]^_`abcdefghijklmnopqrstuvwxyz{|}