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Stochastic Oscillator
Momentum oscillator comparing the latest close to its high-low range over N periods.
What it is
The Stochastic, developed by George Lane in the 1950s, plots two lines (%K and %D) on a 0–100 scale. It measures where the latest close sits inside the recent high-low range — high close near recent highs = strong momentum (>80), low close near lows = weak (<20). Used like RSI for overbought/oversold but reacts faster. Crypto traders favor the Stochastic for short-term entries in ranging markets; in trending markets it stays pinned at the extreme and gives false reversal signals.
Example
XRP trades sideways between $1.30 and $1.42 for a week. Stochastic %K drops below 20 and crosses up through %D at the $1.32 support. A scalper enters long, taking profit at $1.40 when %K hits 80.
How Indikora uses Stochastic Oscillator
Indikora's signal stack includes Stochastic on the 15-minute timeframe for entry timing inside an already-confirmed 4h trend.
Related terms
- RSI (Relative Strength Index) — Momentum oscillator on a 0–100 scale that flags overbought (>70) or oversold (<30) conditions.