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Technical Analysis of Stochastic Oscillator Indices Indicator

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


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


Indices Trading Market Tops


Narrow stock indices market top that does not reach very high above 80%

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



Very high, wide stock indices market tops

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


Indices Trading Market Bottoms


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

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



Very wide, deep stock indices market bottoms

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

 

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