Stochastic Oscillator

Where the close sits within the recent range.

Stochastic: closing near the top of the range, then near the bottom Stochastic %K and %D The stochastic asks a narrow question: within the high-to-low range of the last N periods, where did price close? Closing at the top of the range means buyers finished in control. %K = (close − lowest low) ÷ (highest high − lowest low) × 100 %D = a 3-period average of %K Above 80 Closing near the top of the recent range. Below 20 Closing near the bottom. %K crossing %D The standard trigger, and it fires constantly. Best used In ranges. In a trend it pins to one end and stays there, like RSI. The stochastic is faster and noisier than RSI, which means more signals and a lower hit rate. It is a ranging-market tool sold as an all-weather one.

Part of Learn NEPSE Investing, a free course on reading Nepali company accounts and charts. Section: Charts.