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One way to interpret the Stock Indices signals provided by the Stochastic Oscillator indicator is similar to a moving average crossover strategy. In the Stochastic oscillator indicator, a crossover signal happens when the %K and %D lines crossover.

These crossover Stock Indices signals should be taken with scrutiny as, out of the Stock Indices stochastics oscillator signal interpretations discussed so far, they produce the most Stock Indices trading whipsaws. Whipsaws or False Stock Indices signals are especially common in the Fast Stochastic Oscillator Technical Indicator edition.

Stochastic Oscillator Crossover Signals:

• For a Sell signal, a trader looks for the %K line to move below the %D line.
• For a Buy Indices signal, a trader looks for the %K line to move above the %D line.

Since stochastic crossovers Stock Indices signals of %K and %D are often unreliable, they should be verified with other technical indicators.

The Stochastic Oscillator Technical Indicator Center-line

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

Stochastic Oscillator Center-line Stock Indices Crossovers Signals

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