Crossovers, extreme readings, and range sensitivity.
| Concept | Explanation | |---|---| | %K | Current close relative to the recent high-low range. | | %D | A smoothed signal line based on %K. | | Bullish crossover | %K crosses above %D. | | Bearish crossover | %K crosses below %D. | | Overbought | Commonly above 80; price is near the upper end of its recent range. | | Oversold | Commonly below 20; price is near the lower end of its recent range. |
The stochastic oscillator is often more useful in ranges than in strong trends, where extreme readings can persist.