Forex Analysis part 5
Stochastic Oscillator
It was George C Lane's analysis tool in the late 50's. As the name suggests, the range value on this indicator is 0 - 100 (oscillator). Stochastic Oscillator is used to show the closing position relative to the range of transactions within a certain period. Basically, this indicator is used to measure the relative strength of the last price against the highest price hose and terrendahnya during the interval period we want. Stochastic Oscillator consists of two lines called% K and% D. The core of this indicator is% K itself whereas% D is SMA of% K. It can be said that% D is the line of identifying the direction of% K. If we look at the range of Stochastic Oscillator is 0-100, it can be said that in fact this indicator is not different from RSI. Only in Stochastic calculation include the lowest price, the highest and the closing price at the specified time.
Now what is the use of this indicator? Is it the same as RSI? If the same why not use RSI only? Well this question we will answer in our class this time. Judging from the type, Stochastic is the same as the RSI indicator type Oscillator. Usefulness of this model indicator average is indeed to accommodate the movement of saturation to buy and sell from the movement of currency. But there are some things that RSI does not have but are owned by Stochastic and vice versa. In terms of sensitivity, RSI is still much more sensitive than Stochastic. So also from the ease of reading. RSI does not have smoother like% D on Stochastic. Thus it can eliminate the bias effect on the readings. However, the simplicity of RSI can also be a drawback. RSI is less fitting if used to know the ongoing trend in the currency. While the combined% K and% D on Stochastic can be a fairly powerful duet in predicting the current trend. Another thing is because Stochastic is not as sensitive as RSI then false signal is not as often on RSI. This is why most traders prefer Stochasic in knowing the saturated condition of buying and selling from the market. There is some information that we can get with Stochastic Oscillator. But in general no different from the information on RSI and SMA. And indeed Stochastic Oscillator is actually a combination of both types of indicators by different calculations. Overall, this indicator can be used to determine the overbought / oversold state (which means long-term trend prediction), the intersection between% K and% D (as short term trend), and Bullish / Bearish centerline.
Overbought / Oversold
The overbought / oversold condition according to Stochastic is obtained when the% K line has entered the 20 and 80 thresholds below 20 for oversold and above 80 for overbought. Same with RSI is not it? Please also note that this 20/80 limit is not an absolute limitation. It could be 30/70 or something else. So do not be surprised if I also use different limitations in determining the overbought / oversold condition of this situation. This overbought / oversold condition will trigger long-term ups and downs. In the event of a price increase but stochastic is heading to the overbought point and starting to leave the area, it means there will be pressure on the rate of price increase which in the end makes the price back down until the new balance. Consider the following picture. For overbought / oversold restrictions this time we use 20/80.
When the price has entered the OB or OS area it will slowly move back down along with the direction of Stochastic movement. How many times Stochastic shows great precision in knowing the direction of the next movement (marked with a red circle). By obeying Stochastic alone can already see how big the profit can be generated within a few days of movement. May your eyes open now.
It was George C Lane's analysis tool in the late 50's. As the name suggests, the range value on this indicator is 0 - 100 (oscillator). Stochastic Oscillator is used to show the closing position relative to the range of transactions within a certain period. Basically, this indicator is used to measure the relative strength of the last price against the highest price hose and terrendahnya during the interval period we want. Stochastic Oscillator consists of two lines called% K and% D. The core of this indicator is% K itself whereas% D is SMA of% K. It can be said that% D is the line of identifying the direction of% K. If we look at the range of Stochastic Oscillator is 0-100, it can be said that in fact this indicator is not different from RSI. Only in Stochastic calculation include the lowest price, the highest and the closing price at the specified time.
Now what is the use of this indicator? Is it the same as RSI? If the same why not use RSI only? Well this question we will answer in our class this time. Judging from the type, Stochastic is the same as the RSI indicator type Oscillator. Usefulness of this model indicator average is indeed to accommodate the movement of saturation to buy and sell from the movement of currency. But there are some things that RSI does not have but are owned by Stochastic and vice versa. In terms of sensitivity, RSI is still much more sensitive than Stochastic. So also from the ease of reading. RSI does not have smoother like% D on Stochastic. Thus it can eliminate the bias effect on the readings. However, the simplicity of RSI can also be a drawback. RSI is less fitting if used to know the ongoing trend in the currency. While the combined% K and% D on Stochastic can be a fairly powerful duet in predicting the current trend. Another thing is because Stochastic is not as sensitive as RSI then false signal is not as often on RSI. This is why most traders prefer Stochasic in knowing the saturated condition of buying and selling from the market. There is some information that we can get with Stochastic Oscillator. But in general no different from the information on RSI and SMA. And indeed Stochastic Oscillator is actually a combination of both types of indicators by different calculations. Overall, this indicator can be used to determine the overbought / oversold state (which means long-term trend prediction), the intersection between% K and% D (as short term trend), and Bullish / Bearish centerline.
Overbought / Oversold
The overbought / oversold condition according to Stochastic is obtained when the% K line has entered the 20 and 80 thresholds below 20 for oversold and above 80 for overbought. Same with RSI is not it? Please also note that this 20/80 limit is not an absolute limitation. It could be 30/70 or something else. So do not be surprised if I also use different limitations in determining the overbought / oversold condition of this situation. This overbought / oversold condition will trigger long-term ups and downs. In the event of a price increase but stochastic is heading to the overbought point and starting to leave the area, it means there will be pressure on the rate of price increase which in the end makes the price back down until the new balance. Consider the following picture. For overbought / oversold restrictions this time we use 20/80.
When the price has entered the OB or OS area it will slowly move back down along with the direction of Stochastic movement. How many times Stochastic shows great precision in knowing the direction of the next movement (marked with a red circle). By obeying Stochastic alone can already see how big the profit can be generated within a few days of movement. May your eyes open now.
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