Analysis of Stochastic Oscillator Indicator

A lot of stock trading information can be gathered from the shapes and duration of the stocks market tops and bottoms of the stochastic oscillator stock indicator.

The amount of time that stock stays overbought or oversold is an important factor when analyzing the strength of the stocks market trends.

Stocks Trading Market Tops

Narrow stock market top that doesn't reach very high above 80%

Narrow stock market tops means that the bulls are weak, and that the stock trading bears have overpowered the stock trading bulls very quickly. This means that the stock trading bears might push the stocks price further down without much resistance from the stock trading bulls.

Very high, wide stock market tops

Wide stock market tops mean that the stock trading bulls are very powerful much more than the stock trading bears and the ensuing short term stock trend reversal (retracement), will be very short lived. The retracement on the stochastic oscillator stock technical indicator will not even reach the oversold areas before the stochastic oscillator stock technical indicator moves back to the overbought areas.

Stocks Trading Market Bottoms

A narrow stock market bottom that does not reach very deep below 20 %

The narrow stock market bottom means that stock trading bears are weak in their attempt to push the stocks price down, the stock trading bulls have gained control of the stocks price pretty fast so the stocks price movement upwards will continue for a while. And the upward stock market trend will continue for a while.

Very wide, deep stock market bottoms

A wide stock market bottoms is a sign that the stock trading bears are very strong and the stock sellers are in control of the stocks price, therefore any retracement upwards will not stay for long.