Stochastic
Oscillators
- What it shows
Shows where the close sits inside the recent high to low range, on a 0 to 100 scale, with a smoothed signal line.
- How it is built
%K is the close's position within the range of the last N bars. %D is a moving average of %K.
Default: K length 14, smoothing 1, D 3, levels 80 and 20.
- How traders read it
- Above 80 is read as overbought, below 20 as oversold.
- %K crossing %D is the usual signal.
- In trends it can stay at the extremes.
- History
Developed by George Lane in the late 1950s.
George Lane, late 1950s
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