The Stochastic Pop was developed by Jake Bernstein and modified by David Steckler, who wrote a corresponding article for Stocks & Commodities Magazine in August 2000. Bernstein's original Stochastic Pop is a trading strategy that identifies price pops when the Stochastic Oscillator surges above 80. Steckler modified this strategy by adding conditional filters using the Average Directional Index (ADX) and the weekly Stochastic Oscillator. This article draws on both methodologies to present another modified version of the Stochastic Pop suited for SharpCharts.
Once the trading bias is established, Steckler used the Average Directional Index (ADX) to define a slowdown in the trend. ADX measures the strength of the trend and a move below 20 signals a weak trend. Steckler preferred ADX below 15, but would use 20 as well. A high and rising ADX signals a strengthening trend, while a low and falling ADX indicates that the trend is weakening. On the chart below, 14-period ADX on the daily chart shows a weak trend when it moves below 20. Notice how Gap (GPS) moved into a trading range as ADX dipped below 20 twice (yellow areas).
the obv volume is very important for to determinated the market trend...
Once the trading bias is established, Steckler used the Average Directional Index (ADX) to define a slowdown in the trend. ADX measures the strength of the trend and a move below 20 signals a weak trend. Steckler preferred ADX below 15, but would use 20 as well. A high and rising ADX signals a strengthening trend, while a low and falling ADX indicates that the trend is weakening. On the chart below, 14-period ADX on the daily chart shows a weak trend when it moves below 20. Notice how Gap (GPS) moved into a trading range as ADX dipped below 20 twice (yellow areas).
the obv volume is very important for to determinated the market trend...
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