$ 20,129.00
$ 1,133.87
$ 0.999795
$ 0.456514
$ 0.32324
$ 1.00

Stochastic Oscillator Definition

Stochastic Oscillator Definition

A stochastic oscillator serves as an indicator that compares a closing price of a cryptocurrency to a broad range of the prices that it had over a particular period of time. This makes it a momentum indicator that is sensitive to market movements. Its sensitivity to the market movements can be changed by altering the time period or by getting a moving average of the outcome. Traders mostly use this momentum indicator to produce ‘oversold’ and ‘overbought’ trading signals.

The formula of the stochastic oscillator is:

%K=(C-L14/H14-L14) x 100

%K = the value of the Stochastic indicator

C = the most recent close price

H14 = the high of a 14-day period

L14 = the low of the 14 past trading sessions

The stochastic oscillator is always between 0 and 100, meaning that it is range-bound. Because of this, the stochastic oscillator serves as a very useful indicator of ‘overbought’ and ‘oversold’ circumstances. Basically, traders use this indicator to determine whether a cryptocurrency is being overbought or oversold; in return, they use this information to time their trades.

Why is the Stochastic Oscillator Important?

In normal conditions, when this indicator is above 80 it means that the cryptocurrency is being overbought. On the other hand, when the indicator is under 20, that cryptocurrency is considered oversold. Being overbought means that the cryptocurrency is in a bullish trend while being oversold means that the cryptocurrency is in a bearish trend.

This indicator often consists of two lines: one being the value of the oscillator, and the other being its three-day simple moving average (MA).

Also Read: What Are Fibonacci Retracements & Fibonacci Ratios?


  • The stochastic oscillator is an indicator that serves to indicate whether a cryptocurrency is being overbought or oversold. It was developed in the 1950s by a person known as George Lane.
  • The stochastic oscillator cannot be higher than 100 or lower than 0.
  • When a cryptocurrency is overbought it means that its market is bullish. When it is oversold it means that its market is bearish.


Also read:

Related News

Central Bank Digital Currencies (CBDCs) – Definition

People are becoming more familiar with the technology behind digital currencies as the cryptocurrency industry continues its rapid expansion. There is a constant emergence of innovative forms of digital currency, and a number of important financial institutions are actively exploring these new forms. Large corporations and even financial institutions are gradually becoming more accustomed to using digital forms of currency. What factors have contributed to the development of central bank

Read More »

Is KuCoin Token a Good Investment – Should You Invest in KuCoin?

The cryptocurrency market saw one of the biggest bull runs in its history back in 2021. During this time, several tokens and cryptocurrencies made millionaires overnight. However, as the market grew, people began taking profits, leading to a market correction. In early 2022, the market was attempting to recover, but with everything that was happening around the world, it failed to do so.  One token that is performing well even during these

Read More »

How to Use Pacoca  – A Step-by-Step Guide

  Pacoca is a comprehensive DeFi hub where investors may monitor and invest in several initiatives. Since its inception, the platform has seen tremendous success, drawing a large number of daily investors who use it daily. Decentralized finance (DeFi) is the most profound change to ever occur in the financial markets, and it is expanding rapidly, with almost new protocols being released each day.  Although, there is still a severe

Read More »

My Coins

$ 20,129.003.88%
$ 1,133.874.73%
$ 0.4565142.37%
$ 0.9997950.03%

Newest Videos on YouTube

We inform and educate people about Cryptocurrencies and Blockchain technology.

© Copyright 2021, All Rights Reserved,
Crypto Academy


Contact Us

For any question conatct us through:

Disclaimer: All information and materials on this website are for educational purposes only. does not provide any form of financial advice. Cryptocurrencies are highly volatile, therefore any form of investing carries a high level of risk to your capital. It is recommended that you seek professional advice prior to implementing any investment or financial plan.

We do not ask you for your Cryptocurrency / We do not hold your Coins / We do not ask for Private Keys / Be aware of scammers and imposters.

Contact us only through: