Stochastic Oscillator

The Stochastic Oscillator, developed by George Lane in 1950, is a momentum indicator, an oscillator that relates the current CLOSE to the HIGH-LOW range of a given time period. This oscillator varies from 0 to 100, measuring the position relative to the current CLOSE, with respect to the CLOSE of a given previous period. A value close to 0 indicates that we are close to the minimums of the considered period (oversold zone), on the contrary when the indicator is close to 100 it indicates that we are close to the maximums of the period considered (overbought zone). Therefore if we are in an upward trend the Stochastic Oscillator should position itself at the maximum levels of the range, around 100, close to 0 if we are in a bearish phase. If the Stochastic Oscillator is found to be 0 and 20 it could indicate continuation of the downward trend, on the contrary when we see an overcoming of the horizontal line positioned at 20, we can expect a reversal of the trend, if it is between 20 and 80 we generally evaluate the continuation of the trend until the threshold 80 approaches, if it is between 80 and 100 it indicates upward trend with prices approaching new highs, an inversion could be a cut of the horizontal line at the level 80 downwards.