Stochastic Indices Indicator Cross Over Signals

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

Stochastic Oscillator Crossover Trading Signals:

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

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

The Stochastic Oscillator Indicator Center-line

The stochastic oscillator center-line lies at the 50% level in the stochastic indicator panel. It implies that there is 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 begin to control the trading market trend.

Stochastic Oscillator Center-line Indices Crossovers Signals

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