Stochastic Oscillator

A technical analysis oscillator developed by George Lane, based on the premise that prices tend to close near the top of a candlestick during an uptrend. In a downtrend, they tend to close near the bottom. The Stochastic oscillator calculates where the candlestick closed relative to a range of prices for a specific number of sessions. It is a bounded oscillator, with values ranging between 0 and 100. A reading above 80 signifies an overbought zone, whereas an oversold zone is indicated below 20. It consists of 3 parameters with the default values of %K=5, %D=3 and slowing=3. A crossover between %K and %D lines generates Buy/Sell signals. The Stochastic is a momentum oscillator that performs better in a sideways market.

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