Stochastic Indicator Cross-over Signals

One way to interpret and analyze the signals provided by the Stochastic Oscillator is similar to a moving average MA crossover trading method. In the Stochastic oscillator trading indicator, a crossover signal happens when the %K and %D lines crossover. These crossover signals should be taken with scrutiny as, out of the stochastic oscillator trading signal interpretations discussed so far, they produce the most whipsaw signals. Whipsaws or False signals are especially common in the Fast Stochastic Oscillator Technical version.

Stochastic Crossover Signals:

For a Sell trade signal, a forex trader looks for the % K line to move below Percentage D line.
For a Buy trade signal, a fx trader looks for Percentage K line to move above % D line.

Since stochastic crossovers signals of %K & %D are often unreliable, they should be verified/validated with other indicators.

The Stochastic Oscillator Technical Centerline

The stochastic oscillator technical indicator centerline lies at the 50% level in the stochastic indicator panel. It implies that there is a balance between bulls and bears. Situations when the stochastic indicator crosses the center-line can give an insight into whether the buyers or sellers will start to control the price trend.

Stochastic Center-Line Cross-overs Signals

If the Stochastic oscillator indicator is staying below the center-mark (between 40%-50%) & crosses up, then it is an indication that the bulls (buyers) are taking control of the market.
If the Stochastic oscillator indicator is staying above the center-mark (around 50%-60%) and then crosses below center line, it can be an indication that the bears have taken control of the market.

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Stochastic Indicator Cross-over Signals