Stochastics (Pro Setup) BOSO - How to BUY Overbought (Strength) & Sell Oversold (Weakness)

Trading Application: Playstore: https://play.google.com/store/apps/details?id=io.app.prorsi

IOS: https://apps.apple.com/us/app/prorsi-nse-bse-trading/id1481436770

TELEGRAM CHANNEL: https://t.me/speakingtechnically

MASTER TRADER PROGRAM: https://prorsi.com/programs-and-offers/

BACKGROUND MUSIC:
Modern Business and Uplifting Corporate
Music License
Purchase code: b11647e9-7234-4a06-9c8d-8509cfb89a69
Corporate and Business Innovation
Music License
Purchase code: 5ae3ca50-4b86-44e0-b2d0-01134d3b0abd
Uplifting Inspirational and Upbeat Motivational Corporate
Music License
Purchase code: 3e8c73dc-2de1-463e-b4da-d276fbd9ec5d
Learn everything about #technicalanalysis #STOCHASTICS #Nifty
Developed by George C. Lane in the late 1950s, the Stochastic Oscillator is a momentum indicator that shows the location of the close relative to the high-low range over a set number of periods. According to an interview with Lane, the Stochastic Oscillator “doesn't follow price, it doesn't follow volume or anything like that. It follows the speed or the momentum of price. As a rule, the momentum changes direction before price.” As such, bullish and bearish divergences in the Stochastic Oscillator can be used to foreshadow reversals. This was the first, and most important, signal that Lane identified. Lane also used this oscillator to identify bull and bear set-ups to anticipate a future reversal. As the Stochastic Oscillator is range-bound, it is also useful for identifying overbought and oversold levels.
As a bound oscillator, the Stochastic Oscillator makes it easy to identify overbought and oversold levels. The oscillator ranges from zero to one hundred. No matter how fast a security advances or declines, the Stochastic Oscillator will always fluctuate within this range. Traditional settings use 80 as the overbought threshold and 20 as the oversold threshold. These levels can be adjusted to suit analytical needs and security characteristics. Readings above 80 for the 20-day Stochastic Oscillator would indicate that the underlying security was trading near the top of its 20-day high-low range. Readings below 20 occur when a security is trading at the low end of its high-low range.

Before looking at some chart examples, it is important to note that overbought readings are not necessarily bearish. Securities can become overbought and remain overbought during a strong uptrend. Closing levels that are consistently near the top of the range indicate sustained buying pressure. In a similar vein, oversold readings are not necessarily bullish. Securities can also become oversold and remain oversold during a strong downtrend. Closing levels consistently near the bottom of the range indicate sustained selling pressure. It is, therefore, important to identify the bigger trend and trade in the direction of this trend. Look for occasional oversold readings in an uptrend and ignore frequent overbought readings. Similarly, look for occasional overbought readings in a strong downtrend and ignore frequent oversold readings.Divergences form when a new high or low in price is not confirmed by the Stochastic Oscillator. A bullish divergence forms when price records a lower low, but the Stochastic Oscillator forms a higher low. This shows less downside momentum that could foreshadow a bullish reversal. A bearish divergence forms when price records a higher high, but the Stochastic Oscillator forms a lower high. This shows less upside momentum that could foreshadow a bearish reversal. Once a divergence takes hold, chartists should look for a confirmation to signal an actual reversal. A bearish divergence can be confirmed with a support break on the price chart or a Stochastic Oscillator break below 50, which is the centerline. A bullish divergence can be confirmed with a resistance break on the price chart or a Stochastic Oscillator break above 50.

50 is an important level to watch. The Stochastic Oscillator moves between zero and one hundred, which makes 50 the centerline. Think of it as the 50-yard line in football. The offense has a higher chance of scoring when it crosses the 50-yard line. The defense has an edge as long as it prevents the offense from crossing the 50-yard line. A Stochastic Oscillator cross above 50 signals that prices are trading in the upper half of their high-low range for the given look-back period. This suggests that the cup is half full. Conversely, a cross below 50 means that prices are trading in the bottom half of the given look-back period. This suggests that the cup is half empty.George Lane identified another form of divergence to predict bottoms or tops, dubbed “set-ups.” A bull set-up is basically the inverse of a bullish divergence.Even though the stock could not exceed its prior high, the higher high in the Stochastic Oscillator shows strengthening upside momentum. The next decline is then expected to result in a tradable bottom.

Видео Stochastics (Pro Setup) BOSO - How to BUY Overbought (Strength) & Sell Oversold (Weakness) канала Bharat Jhunjhunwala