Stochastic Indicator Cross Over Signals

One way to analyze and interpret the signals provided by the Stochastic Oscillator Technical indicator is similar to a moving average MA crossover strategy. In the Stochastic oscillator indicator, a crossover signal happens when the %K & %D lines crossover. These cross over signals should be taken with scrutiny as, out of the trading stochastic oscillator signal interpretations discussed so far, they produce the most whipsaws. Whipsaws or False signals are especially common in Fast Stochastic Oscillator version.

Stochastic Oscillator Crossover Signals:

For a Sell gold signal, a gold trader looks for % K line to move below the %D line.
For a Buy signal, a gold trader looks for the % K line to move above the %D line.

Since stochastic crossovers signals of %K and %D are often unreliable, they should be validated with other technical indicators.

The Stochastic Oscillator Centerline

The stochastic oscillator centerline lies at the 50% level in the stochastic technical indicator panel. It implies that there's a balance between bulls and bears. Situations when the stochastic indicator crosses the center-line can give an insight into whether the buyers or sellers will start to control the price trend.

Stochastic Oscillator Center-line Cross-overs Signals

If the Stochastic oscillator indicator is staying below the center-mark (between 40%-50%) and crosses up, then it's an indication the trading bulls are taking control of the market.
If the Stochastic oscillator indicator is staying above the center-mark (around 50%-60%) & then crosses below the center line, it can be an indication that the trading bears have taken control of the market.

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Stochastic Indicator Cross Over Signals