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Forex indicators How do you use stochastic oscillators?
avatar Shein_cooper
Question by: Shein_cooper - 14 Dec 2017, 12:31:43
How do you use stochastic oscillators?
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Answers (1)
avatar user 12918
Answer by: Lock - 09 Apr 2018, 14:12:01

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.

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