Stochastic indicator VS Stochastic RSI

[Koskapak]

What does it mean when the stochastic RSI is low (<20), but the stochastic indicator is in the mid-high range (>50)?

 

 

[Rishabh Tyagi]

To learn more you can check out the guide: https://www.asktraders.com/learn-to-trade/technical-analysis/stochastic-oscillator/

Stochastic Indicator: It is a momentum oscillator that compares a security's closing price to its price range over a specific period. It measures the current price relative to the highest high and lowest low within the chosen period. The Stochastic indicator consists of two lines, %K and %D, which oscillate between 0 and 100.

Key features of the Stochastic indicator:

Range-bound oscillator: The Stochastic indicator operates within a fixed range of 0 to 100, with values above 80 indicating overbought conditions and values below 20 suggesting oversold conditions.

Signal crossovers: Traders often look for bullish or bearish crossovers between the %K and %D lines to identify potential buy or sell signals.

Divergence: Divergence between price and the Stochastic indicator can indicate potential trend reversals.

 

Stochastic RSI: The Stochastic RSI is a variation of the standard Stochastic indicator that incorporates the RSI as part of its calculation. The RSI is a momentum oscillator that measures the speed and change of price movements. By combining the Stochastic and RSI, the Stochastic RSI aims to provide a more refined analysis of market conditions.

Key features of the Stochastic RSI:

Smoother indicator: The Stochastic RSI is typically smoother than the regular Stochastic indicator due to the inclusion of the RSI, which helps filter out noise and provide a clearer signal.

Overbought and oversold levels: The Stochastic RSI often uses different overbought and oversold levels compared to the standard Stochastic indicator. Commonly used levels are 80 for overbought and 20 for oversold.

Longer timeframes: The Stochastic RSI is often used with longer timeframes, such as daily or weekly charts, to identify broader market trends and potential turning points.

Day Frame

5-min frame

Edited May 22, 2023 by Rishabh Tyagi