Teljmanel66
New Member
The stochastic oscillator is used to compare the current price level of an asset to its range over a set timeframe – again, this is usually 14 periods.
Within an uptrend, a market will tend to close nearer to its highs and in a downtrend, it would close nearer to its lows. When prices move away from these extremes and toward the middle of its price range, it is often a sign that the momentum is exhausted and likely to change direction.
Like the RSI, the stochastic moves on a scale between zero and 100. A stochastic value of over 80 usually indicates an overbought status, and a value of 20 or lower typically indicates oversold conditions.