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Stochastic XAUUSD Indicator Over-bought and Oversold Levels

Stochastic oscillator technical is used to look for overbought/oversold signals. Overbought levels are above 80% level and over-sold levels are below 20% level.

The key is to not only look at Stochastic oscillator technical indicator when the %K or %D lines touch or cross-over-bought/oversold, but also when they cross over and back through these levels.

Just as with other xauusd momentum indicators such as RSI indicator the Stochastic oscillator indicator can stay inside the overbought & oversold levels for some time. When this xauusd stochastic indicator stays within these levels for a long time it indicates strong upward trend (overbought) or strong downwards trend (oversold).

When the stochastic lines cross back below or above these overbought & over-sold levels it's usually a good indication of an upcoming trend reversal.

A trader can look for further signals to make the over-sold or over-bought levels more reliable if:

Buy Trade Signal Using Stochastic Oscillator Trading Indicator Over-sold Levels

  • Before Buying, the %K & %D lines turn upward from below 5 %.
  • A reading that is floating near 5% means that xauusd bears are in control and there is selling of the xauusd. A trader should wait for the Stochastic Oscillator Trading Indicator Trading Indicator to move back above 5% as a sign that the selling pressure is easing.

The Buy signal is confirmed when the stochastic oscillator technical indicator moves above over-sold, then after a while returns to over-sold but this time moves up immediately without staying at the over-bought.

Stochastic Overbought Levels and Oversold Levels XAUUSD Signals - What are Stochastic Overbought Levels?

Buy Trade Signal Using Stochastic Oscillator Trading Indicator Over-sold Levels

Sell XAUUSD Signal Using Stochastic Oscillator Trading Indicator Over-bought Levels

  • Before Selling, the %K and %D lines turn down from above 95 %.
  • A reading that is floating above 95% means that xauusd bulls are in control and there is buying of the xauusd. A trader should wait for the Stochastic to move below 95% as a sign that the buying pressure is easing.
  • The sell signal is confirmed when the stochastic moves below overbought, then after a while returns to overbought but this times moves downward immediately without staying at the over-bought.

Stochastic Overbought Levels and Oversold Levels Signals - What are Stochastic Overbought and Oversold Levels?

Sell XAUUSD Signal Using Stochastic Oscillator Trading Overbought Levels

Looking at different chart timeframes when using oversold and overbought levels can also help to determine the correct entry strategy when opening a trade position.

The main theory is to trade with the trend. Always double check the signals with the longer term stochastic indicators to confirm signals on the shorter chart timeframe periods.

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