Stochastic Oscillator
| The Stochastic Oscillator is a technical indicator used to identify overbought and oversold levels of various assets based on the price history. The indicator is based on the premise that in an up-trending market, prices will close near the high of the period, and in a down-trending market, prices will close near the low of the period. The indicator consists of two lines - %K and %D. %K is the main line and is derived by calculating the Fast Stochastic Oscillator. %D is a signal line and is a moving average of %K. The Stochastic Oscillator can be used to identify potential turning points in the market. When the %K line crosses above the %D line, it is a bullish signal, and when the %K line crosses below the %D line, it is a bearish signal. In addition, when the %K line is above 80, it is considered overbought, and when the %K line is below 20, it is considered oversold. The Stochastic Oscillator can be used in conjunction with other technical indicators to confirm signals. For example, if the %K line crosses above the %D line and the price is also above the 200-day moving average, it would be a more bullish signal than if the price was below the 200-day moving average. The Stochastic Oscillator can be a useful tool for traders and investors in all markets. |
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