Download the free and open-source cTrader Stochastic Oscillator trading robot. The stochastic oscillator is a momentum indicator in technical analysis that measures the closing price relative to a range of prices over a specific period, helping to identify overbought and oversold conditions.
It is represented by two lines: %K, which tracks the current price's position within the range, and %D, a moving average of %K, often used as a signal line. Values above 80 typically indicate an overbought condition, suggesting a potential price pullback, while values below 20 indicate an oversold condition, hinting at a potential price increase. The stochastic oscillator is particularly useful in identifying trend reversals, as crossovers between %K and %D lines or moves from overbought/oversold levels can signal entry or exit points for traders.
