Stochastic Oscillator

The Stochastic Oscillator is a momentum indicator used in technical analysis to compare a cryptocurrency’s closing price to its price range over a specific period.

How the Stochastic Oscillator Works

The indicator consists of two lines: %K (the main line) and %D (a moving average of %K). It ranges from 0 to 100, with values above 80 typically indicating overbought conditions and below 20 signaling oversold levels. Traders use it to identify potential trend reversals, entry points, or divergences in price momentum.

Why It’s Useful in Crypto

In volatile markets like crypto, the Stochastic Oscillator helps traders spot short-term price momentum and potential reversal signals. It’s particularly useful when combined with other indicators to confirm trends or filter out market noise. While not foolproof, it remains a popular tool for both beginner and seasoned analysts.