Stochastic Oscillator


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Stochastic Oscillator

In technical analysis, an indicator of market momentum. A stochastic oscillator measures whether the closing price of a security is closer to the high or the low. It is based on the assumption that when a market is trending upward, the closing price will be closer to the highest price, and, when it is trending downward, the closing price will be closer to the lowest price. It is calculated as:

Stochastic Oscillator = 100 * (closing price for a given day - lowest price for the previous 14 trading days) / (highest price for the previous 14 trading days - lowest price for the previous 14 trading days).
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However, both the RSI and Stochastic Oscillator are each suggesting that the Kiwi is currently oversold.
Its slow stochastic oscillator entered an overbought region and displayed convergence between the slow and fast lines.
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The stochastic oscillator is a momentum indicator used in technical analysis, introduced by George Lane in the 1950s, to compare the closing price of a commodity to its price range over a given time span.
The stochastic oscillator reveals the pair to be in so-called "overbought" territory and may lose all strength soon.
For the sake of simple illustration, we consider the stochastic oscillator with multiplicative white noise
The range of possible values for the stochastic oscillator lies between 0% and 100%, with 20% generally considered oversold and 80% overbought.
The criteria include New High, New Low, Turning Up or Down, Percent Change in Volume, News, and even technical indicators such as Relative Strength and Stochastic Oscillator.
Swing-traders may want to know that CIEN's short-term stochastic oscillator value predicts a notable leg lower should be in the cards.
Both the Stochastic Oscillator and RSI are each suggesting that the GBPUSD is oversold and looking at the historical correlation between these two momentum indicators, the price seems to quickly rebound after approaching the oversold boundaries.
The stochastic oscillator also show that the pair has substantial momentum pushing it higher.
At the same time, TSM traders need to take heed that TSM's short-term stochastic oscillator index expects that a meaningful trend below current levels is near.

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