Stochastic Oscillator (redirected from Lane's Stochastics)

Stochastic Oscillator

A technical momentum indicator that compares a security's closing price to its price range over a given time period. The oscillator's sensitivity to market movements can be reduced by adjusting the time period or by taking a moving average of the result. This indicator is calculated with the following formula:

%K = 100[(C – L14)/(H14 – L14)]

C = the most recent closing price
L14 = the low of the 14 previous trading sessions
H14 = the highest price traded during the same 14-day period.

Notes:

The theory behind this indicator is that in an upward-trending market prices tend to close near their high, and during a downward-trending market, prices tend to close near their low. Transaction signals occur when the %K crosses through a three-period moving average called the "%D".

See also: Close, Indicator, Technical analysis, Williams R%