Stochastic Oscillator
The Stochastic Oscillator is a momentum indicator used in technical analysis that measures the speed and direction of price movements. It compares a security’s closing price to its price range over a given period of time. The indicator is displayed as two lines. The main line is called %K, and the signal line is called %D. The Stochastic Oscillator is used to generate buy and sell signals, identify potential reversals, and gauge the strength of a trend.
History of the Stochastic Oscillator
The Stochastic Oscillator was developed by George Lane in the 1950s. Lane was a technical analyst who believed that the momentum of a security’s price was a key indicator of future price movements. He developed the Stochastic Oscillator to measure the momentum of a security’s price. The Stochastic Oscillator is a popular indicator among technical analysts and is widely used in trading strategies.
Comparison Table
| Indicator | %K | %D |
|---|---|---|
| Range | 0-100 | 0-100 |
| Interpretation | Momentum | Trend |
| Signals | Overbought/Oversold | Buy/Sell |
Summary
The Stochastic Oscillator is a momentum indicator used in technical analysis to measure the speed and direction of price movements. It was developed by George Lane in the 1950s and is widely used in trading strategies. The indicator is displayed as two lines, %K and %D, which measure momentum and trend respectively. The Stochastic Oscillator is used to generate buy and sell signals, identify potential reversals, and gauge the strength of a trend. For more information, visit Investopedia, TradingView, and StockCharts.
See Also
- Relative Strength Index (RSI)
- Moving Average Convergence Divergence (MACD)
- Bollinger Bands
- Average Directional Index (ADX)
- On Balance Volume (OBV)
- Commodity Channel Index (CCI)
- Williams %R
- Price Rate of Change (ROC)
- Average True Range (ATR)
- Accumulation/Distribution Line (ADL)
