Stochastic Oscillator 14 3 3 (STOCH) is a range bound momentum oscillator. The Stochastic 14 3 3 indicator is designed to display the location of the close compared to the high/low range over a user defined number of periods.
Stochastic Oscillator 14 3 3 is used to:
(1) Identify overbought and oversold levels
(2) find divergences and
(3) identify bull and bear set ups or crypto signals.
Meaning of Stochastic 14 3 3 indicator
Stochastic 14 3 3 meaning: STOCH 14 3 3 is a range-bound oscillator consisting of two lines that move between 0 and 100. The first line (known as %K) displays the current close in relation to a user-defined period’s high/low range. The second line (known as %D) is a simple moving average of the %K line. Now, as with most indicators, all of the periods used within Stochastic 14 3 3 can be user defined. That being said, the most common choices are a 14 period %K and a 3 period SMA for %D.
The basic understanding is that Stochastic 14 3 3 uses closing prices to determine momentum. When prices close in the upper half of the look-back period’s high/low range, then the Stochastic Oscillator 14 3 3 (%K) rises also indicating an increase in momentum or buying/selling pressure. When prices close in the lower half of the period’s high/low range, %K falls, indicating weakening momentum or buying/selling pressure.
Much like with any range-bound indicator, Overbought/Oversold conditions are a primary signal generated by the Stochastic Oscillator 14 3 3. The default thresholds are 20 for oversold and 80 for overbought.
It is typically best to trade along with the trend when using Stochastic 14 3 3 to identify overbought/oversold levels. The reason is that overbought does not always mean a bearish move just like oversold does not always mean a bullish move. Many times overbought (oversold) conditions can be a sign of a strengthening trend and not necessarily an impending reversal.
The Stochastic Oscillator 14 3 3 is usually plotted with a 3-day simple moving average that acts as the trigger line. When the Stochastic Oscillator 14 3 3 crosses above the trigger line it is a bullish moving average crossover, and when it crosses below it is bearish.
FAQs
Stochastic (14, 3, 3) (STOCH)
What is the stochastic RSI setting 14 14 3 3? ›
Stochastic Oscillator (14, 3, 3):
The most common parameters for the Stochastic Oscillator are (14, 3, 3), which means: 14-period %K: The current closing price minus the lowest price over the last 14 periods, divided by the highest price minus the lowest price over the last 14 periods.
What is 5-3-3 stochastic settings? ›
The default settings are 5, 3, 3. Other commonly used settings for Stochastics include 14, 3, 3 and 21, 5, 5. Stochastics is often referred to as Fast Stochastics with a setting of 5, 4, Slow Stochastics with a setting of 14, 3 and Full Stochastics with the settings of 14, 3, 3.
What is a good stochastic number? ›
The stochastic indicator is scaled between 0 and 100. A reading above 80 indicates that the instrument is trading near the top of its high-low range. A reading below 20 signals that the instrument is trading near the bottom of its high-low range.
What is the 14 day stochastic oscillator? ›
The default setting for the Stochastic Oscillator is 14 periods, which can be days, weeks, months or an intraday timeframe. A 14-period %K would use the most recent close, the highest high over the last 14 periods and the lowest low over the last 14 periods. %D is a 3-day simple moving average of %K.
What is the stochastic indicator 14 3 3? ›
Stochastic 14 3 3 meaning: STOCH 14 3 3 is a range-bound oscillator consisting of two lines that move between 0 and 100. The first line (known as %K) displays the current close in relation to a user-defined period's high/low range. The second line (known as %D) is a simple moving average of the %K line.
Is stochastic RSI or stochastic better? ›
Relative strength index was designed to measure the speed of price movements. The stochastic oscillator formula works best when the market is trading in consistent ranges. RSI is generally more useful in trending markets and stochastics are more useful in sideways or choppy markets.
What is the best stochastic setting for a daily chart? ›
For OB/OS signals, the Stochastic setting of 14,3,3 works well. The higher the time frame the better, but usually a H4 or a Daily chart is the optimum for day traders and swing traders.
What is the best time frame for stochastic RSI? ›
Stochastic RSI examines the movements of the RSI indicator within a given period. It doesn't emphasize current price levels. The most popular calculation period is 14 (days, sessions, hours or even minutes).
What is %d and %k in stochastic RSI? ›
For a stochastic oscillator, %K is the current price of the security, shown as a percentage of the difference between its highest and lowest point over the time the oscillator is being used. %D is a 3-day average of %K. This shows whether the current trend is continuing or changing.
The Stochastic Indicator predicts market turning points or reversals by comparing a currency pair's current closing price with its price range. If the prices close near the high or low price in the range, it signals a market reversal.
How to use stochastics for day trading? ›
One way that traders use Stochastic Oscillator is to buy when the two lines intersect below the oversold level. They ride the upward trend until the two lines intersect above the overbought level. This is shown in the chart below.
Which indicator gives a buy-sell signal? ›
Stochastics are a favored technical indicator because they are easy to understand and have a relatively high degree of accuracy. It falls into the class of technical indicators known as oscillators. The indicator provides buy and sell signals for traders to enter or exit positions based on momentum.
What is StochRSI 14? ›
For example, 14-day StochRSI would use the current value of 14-day RSI and the 14-day high-low range for 14-day RSI. 14-day StochRSI equals 0 when RSI is at its lowest point for 14 days. 14-day StochRSI equals 1 when RSI is at its highest point for 14 days.
What are the best stochastic periods? ›
Stochastic Oscillator Formula
The %D line is a 3-period Simple Moving Average of the %K line. The best settings for the Stochastic Oscillator can vary depending on the trader's strategy and the asset being traded. However, common settings include a 14-period lookback and a 3-period smoothing for %D.
What is the best setting for stochastic RSI? ›
The default settings for the StochRSI indicator are as follows. K= 3, D = 3, RSI = 14, and Stochastic Length= 14. These default settings work well for 15 15-minute timeframes and above. Change your Stochastic Length to 8 for a smaller timeframe.
What is a good 14-day RSI? ›
The RSI is typically based on a 14-day time frame with high values being 70 or above, and low values being 30 or below. Levels such as 80 or 20 indicate a stronger trend in upward or downward momentum, respectively. RSI was first introduced by American technical analyst J. Welles Wilder Jr.
What is the RSI 14 setting? ›
The “RSI Period” refers to the number of recent price bars the indicator considers for its calculation. For intraday trading purposes, a default period setting is 14, reflecting the analysis of the past 14 price bars.
What does it mean when RSI is at 14? ›
If the RSI is less than 30, it means that the market is oversold, and that the price might eventually increase. Once the reversal is confirmed, a buy trade can be placed. Conversely, if the RSI is more than 70, it means that it's overbought, and that the price might soon decline.
