StochasticsThe Stochastics chart draws two lines, the faster line is formed by comparing
the last closing price to recent trading range, that is the highest high in
the last n-periods minus the lowest low in the same period. The slower line
is formed by smoothing the fast line with a moving average.
You may also choose slow stochastics, in which we plot the smoothed slower line above as the fast line on the plot, and we then take a moving
average of this line as the slow line.
Additionally, you can go for full stochastic analysis by altering the third parameter from the default, which provides a "smoothing factor" for the fast line, applying a simple Moving Average over the relevant period of this line.
The signals in Stochastic are:
Buy when the stochastics are below %20 (oversold), and either move back above
%20 or form a higher low then its previous low. Or buy when the fast line
crosses above the slow line.
Similar, Sell when the stochastics are above %80 (overbought), and either move
down below %80 or form a low high than is previous high. Or sell when the fast line crosses below the slow line.