Stochastic oscillator: where the close sits in its 14-bar range, smoothed %K and %D, with levels at 80 and 20.
Overview
The Stochastic shows where the close sits within the recent high-low range, on a scale of 0 to 100 in its own pane. It has a blue %K line and an orange %D line, with a band between 80 and 20.
With smoothing 3, it is the classic slow stochastic.
How it works
Raw %K = (close - lowest low of 14 bars) / (highest high - lowest low) x 100. %K = 3-bar SMA of raw %K. %D = 3-bar SMA of %K.
A %K smoothing of 1 gives the fast stochastic.
How to use it
- Some traders watch readings above 80 or below 20 as stretched.
- Use %K crossing %D as a change in short-term momentum.
- Look for divergence between the stochastic and price.
- In strong trends it can stay in a zone for a long time.
These are ways some traders read it, for learning. They are not trade signals.
Settings
| Setting | Default |
|---|---|
| Settings | |
| %K LengthNumber of bars used for the highest high / lowest low range of the raw %K. | 14 |
| %K SmoothingSimple moving average length applied to the raw %K. 1 gives the fast stochastic, 3 the classic slow stochastic. | 3 |
| %D SmoothingSimple moving average length of the %D signal line, applied to the smoothed %K. | 3 |
| Overbought LevelLevel above which the oscillator is considered overbought. | 80 |
| Oversold LevelLevel below which the oscillator is considered oversold. | 20 |
| Style | |
| %KColor of the %K line. | #5b9cf6 |
| %DColor of the %D signal line. | #ff9800 |
| Band FillFill color of the area between the overbought and oversold levels. | #5b9cf61a |
Alerts
You can alert on its line crossing a value or the candle close (from the chart's + menu); checked while ZoroCharts is open.
Notes and limits
- Works on any symbol and timeframe; it only needs candle data.
- It moves fast and can cross often in ranges.
Education only. Not financial advice. Indicators mark what happened on the chart; they do not predict what price will do. Trading futures, forex, crypto and other markets carries a high level of risk and may not be suitable for everyone.