Developed by George C. Lane in the late 1950s, the Stochastic Oscillator is a momentum indicator that shows the location of the close relative to the high-low range over a set number of periods.
The Stochastic Oscillator “doesn’t follow price, it doesn’t follow volume or anything like that. It follows the speed or the momentum of price. As a rule, the momentum changes direction before price.” As such, bullish and bearish divergences in the Stochastic Oscillator can be used to foreshadow reversals. This Ebook will teach you how:
To interpret the readings of Stochastic Oscillator
To derive signals from the line crossovers
To distinguish between false and real signals
To stop divergences
To combine it with other technical studies