The stochastic oscillator is a technical indicator reflecting the position of a current price to the price range of a certain time period. This indicator is expressed in percentages. This oscillator turns the price line on a chart into percentages. As the price moves only in the 0% to 100% range, the stochastic oscillator shows when the price is near 0% or 100%. When the gauge rises over 80%, it is recommended to open a sell deal, while the reading below 20% means it is the time to open a buy deal. However, the strongest signal generated by the oscillator is divergence, when the asset price and the indicator move in opposite directions. If the stochastic oscillator is crossing 80% while the price is falling, this foretells a considerable slump in the market. Vice versa, if the gauge is moving below 20% and the price is rising, a strong buy signal is generated. The stochastic oscillator is always applied alongside its moving average, which is shown on the chart as an additional line.
It is an oscillating technical indicator that is designed to gauge how strong price movements of a currency pair are in a certain period of time. The Momentum belongs to leading indicators. When the indicator touches a bottom, reverses and goes upwards, a buy signal is formed. A sell signal appears when the indicator surges to a top and moves downwards. If the Momentum shows extremums, the current trend is likely to continue. If the gauge jumps sharply while declining amid rising or steady prices, the market is near its high. The main disadvantage of the indicator is the high instability of its results.
The best idea of using the Momentum indicator in trading is to combine it with oscillators and other trend indicators. Applying Momentum alongside moving averages and trend indicators, you will gain better profits in forex trading. To ensure more accurate technical analysis, traders are recommended to apply Momentum at the time of higher volatility when an indicator’s curve on a chart and a market trend are moving in the same direction in parallel. If you have enough forex experience, you may try to use this indicator when trading against a trend. In the settings, you should specify features of additional levels which will serve as borders of the overbought and oversold zones. Besides, please be aware that accuracy of the indicator’s signals may vary depending on a particular trading asset and time frame. For example, it would be wise to consider a bigger time frame for long-term trading. A particular time frame should be set, taking into account characteristics of a trading instrument. In case these factors are neglected, signals could come out with a delay or they could be less accurate.
CCI (commodity channel index) is an oscillating indicator that allows traders to determine the moment of strong and weak fluctuations of an asset (overbought/oversold). The indicator can also serve as a signal of trend weakening or reversal. CCI is a popular trading tool that can be applied to any time frame and with any strategy.
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