Stochastic Oscillator Explained

in #forex7 years ago

The stochastic oscillator is a momentum indicator comparing the closing price of a security to the range of its prices over a certain period of time. The sensitivity of the oscillator to market movements is reducible by adjusting that time period or by taking a moving average of the result. As designed by Lane, the stochastic oscillator presents the location of the closing price in relation to the high and low range of the price over a period of time, typically a 14-day period. The oscillator follows the speed or momentum of price. It is used a lot to identify overbought and oversold markets.

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