Stochastic Trading Indicator Cross Over Signals

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

Stochastic Crossover Signals:

For a Sell trade signal, a stock index trader looks for the Percentage K line to move below the %D line.
For a Buy trading signal, a stock indices trader looks for the % K line to move above the Percentage D line.

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

The Stochastic Oscillator Indicator Center Line

The stochastic oscillator trading centerline lies at the 50 % level in the stochastic trading indicator panel. It implies that there is a balance between bulls & 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 Center-line Cross-overs Signals

If the Stochastic oscillator indicator is staying below the center-mark (between 40%-50%) & crosses up, then it is an indication that the 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 trading bears have taken control of the trading market.

Learn More Lessons and Topics:

Trade Stock Indices

Stochastic Trading Indicator Cross Over Signals