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Stochasticoscillator

Stochastic RSI in detail and how to use it.The Stoch RSI (Stochastic Relative Strength Index) is a technical analysis indicator used to identify overbought or oversold conditions in financial markets. It is a combination of two popular indicators: the Stochastic Oscillator and the Relative Strength Index (RSI). The Stoch RSI applies the Stochastic Oscillator formula to the RSI values, aiming to provide a more sensitive and faster signal for potential trend reversal. The Stoch RSI is calculated as follows: Choose the time period for which you want to calculate the Stoch RSI. The most common period is 14 . Calculate the RSI: (Detailed post on this in the link below) Determine the highest and lowest RSI values: Identify the highest and lowest RSI values over the same time period (e.g., 14 days). Calculate the Stoch RSI: Use the following formula to calculate the Stoch RSI: Stoch RSI = (Current RSI - Lowest RSI) / (Highest RSI - Lowest RSI) The resulting Stoch RSI value will range from 0 to 1 (or 0% to 100%). A value above 0.8 (or 80%) typically indicates an overbought condition, suggesting a potential price correction or reversal, while a value below 0.2 (or 20%) indicates an oversold condition, which may represent a buying opportunity. What does Stoch RSI tell us ? Stoch RSI is a measure of how fast the RSI is changing. As an analogy. Imagine you are driving your car and have foot on the accelerator which will cause increase in the speed of your cat at every moment, now the rate at which your car's speed increases is acceleration. The bigger the more powerful engine your car has the more acceleration you get and the faster you get to the top speed of your car. So, in this analogy speed of your car at any instant is RSI , acceleration is Stoch RSI and top speed of your car is overbought condition of an asset. RSI measures who is relatively more aggressive among buyers and sellers at a given instant. Stoch RSI measures how aggressive the buyers or sellers are at a given instant. So just like in a fight if someone is too aggressive, they are going to spend themselves too quickly and even though they want to fight more they won't be able to until they ease up and relax a bit, this is similar to Stoch RSI of an asset getting to overbought condition and then asset either retraces or takes a pause as buyers are exhausted and need to regain strength by taking profits which turns them into sellers and the asset starts moving in opposite direction. Why is 80 considered overbought? The number 80 is chosen based on empirical evidence, suggesting that when the Stoch RSI reaches these extreme values, there is a higher probability of a price reversal or correction. When the Stoch RSI is above 80, it indicates that the asset's price has risen significantly over a short period and could be overextended. In this situation, the asset may be overvalued, and traders may consider selling or taking profits as the price could reverse or correct. How to use Stoch RSI to enter a trade? How to enter a Long Trade: ======================= Step 1. Always use Stoch RSI along with RSI to make a decision: Step 2. Use it on mid to high term time frame (4h and higher). Step 3. Make sure both RSI and Stoch RSI are in oversold zone. Step 4. Make sure the asset is resting on a key support level and holding it. Step 5. Fearlessly enter the trade. How to enter a Short Trade: ======================= Step 1. Always use Stoch RSI along with RSI to make a decision: Step 2. Use it on mid to high term time frame (4h and higher). Step 3. Make sure both RSI and Stoch RSI are in overbought zone. Step 4. Make sure the asset is rejected from a key resistance level and is not able to breach it. Step 5. Fearlessly enter the trade. What happens if Support or Resistance is broken in Step 3 above: ======================================================= That's where divergences come into play. What is a divergence? =================== Divergence is a technical analysis concept that occurs when the price of an asset and RSI/Stoch RSI indicator move in opposite directions, indicating a potential trend reversal. There are two types of divergences: bullish divergence and bearish divergence. Bullish divergence occurs when the price of an asset makes a new low while the RSI/Stoch RSI indicator makes a higher low. Remember from explanation provided in sections above, this suggests that even though the price is going lower there are more buying activities than selling and the assets are becoming stronger, and a potential trend reversal may be imminent. Bearish divergence, on the other hand, occurs when the price of an asset makes a new high while the RSI/Stoch RSI indicator makes a lower high. I have highlighted bullish divergence in chart with purple line. Shown in Red line is bullish Divergence in Stoch RSI, when RSI is not fully oversold, this can happen when a new support is being formed on the chart due to changes in fundamentals of the underlying asset or some news events. Bullish and Bearish Divergences are even more powerful signals for taking trades, but we must make sure price is holding a support or rejecting from a resistance before taking the trades, otherwise divergences can easily disappear. Why do traders fail to effectively use RSI? The primary reason is lack of experience in trading. Which leads to impatient behavior. Not knowing how to mark key support/resistance levels. No risk management skills. (Taking too much risk) Lack of trust in self when taking trades, (Keep stopping losses too tight which knocks them out of the trades). I have shown several instances where RSI generated long signals and all of them were successful, the only reason a trader would not be able to use RSI effectively is because of the above reasons.
SP:SPXEducation
by zakoraio
Top 10 Technical Indicators for Successful TradingTop 10 technical indicators for successful trading Introduction: Technical indicators are essential tools for traders to analyze market trends, identify potential trading opportunities, and manage risk. These indicators are mathematical calculations based on past price and volume data that can help traders make informed decisions about buying or selling assets. In this article, we'll discuss the top technical indicators that traders can use to enhance their trading strategies. Moving Average: A moving average is a widely used technical indicator that helps traders identify market trends. A moving average is calculated by averaging the price of an asset over a specific period, such as 10 days or 50 days. This indicator smooths out the price data and makes it easier for traders to identify the direction of the trend. When the price is above the moving average, it's considered a bullish trend, and when the price is below the moving average, it's considered a bearish trend. Relative Strength Index (RSI): The Relative Strength Index (RSI) is a momentum oscillator that measures the strength of a price trend. The RSI is calculated by comparing the average gains and losses over a specific period, typically 14 days. The RSI value ranges from 0 to 100, with values above 70 indicating an overbought market, and values below 30 indicating an oversold market. Traders can use the RSI to identify potential trend reversals and overbought or oversold conditions in the market. Bollinger Bands: Bollinger Bands are another widely used technical indicator that helps traders identify potential trend reversals and price volatility. Bollinger Bands consist of three lines: a moving average in the center, and two outer bands that represent the standard deviation of the price data. When the price is within the bands, it's considered normal market volatility. However, when the price reaches the outer bands, it's considered an overbought or oversold condition, and a potential reversal may be imminent. MACD (Moving Average Convergence Divergence): The Moving Average Convergence Divergence (MACD) is a trend-following momentum indicator that helps traders identify changes in momentum and trend reversals. The MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. A signal line, which is a 9-day EMA of the MACD, is also plotted on the chart. Traders can use the MACD to identify potential buy and sell signals, as well as divergences between the MACD and the price of the asset. Fibonacci Retracements: Fibonacci Retracements are a popular technical indicator that helps traders identify potential support and resistance levels. Fibonacci Retracements are based on the idea that prices tend to retrace a predictable portion of a move, after which they may continue in the original direction. Traders can use Fibonacci retracements to identify potential entry and exit points, as well as stop-loss levels. Stochastic Oscillator: The Stochastic Oscillator is another momentum oscillator that helps traders identify overbought and oversold conditions in the market. The Stochastic Oscillator is calculated by comparing the closing price of an asset to its price range over a specific period. The Stochastic Oscillator value ranges from 0 to 100, with values above 80 indicating an overbought market, and values below 20 indicating an oversold market. Traders can use the Stochastic Oscillator to identify potential trend reversals and overbought or oversold conditions in the market. Average True Range (ATR): Average True Range (ATR) is a technical indicator that measures the volatility of a stock or currency. Developed by J. Welles Wilder Jr., ATR calculates the average range of price movements over a specific period, taking into account gaps in price movements. ATR is typically calculated over a period of 14 days, but traders can adjust this period to fit their specific trading strategy. To calculate ATR, traders first calculate the true range (TR), which is the greatest of the following: Current high minus the current low Absolute value of the current high minus the previous close Absolute value of the current low minus the previous close Once the true range is calculated, traders can calculate the ATR by taking an average of the true range over a specific period. ATR can be used to measure volatility in the market, helping traders to identify potential trading opportunities. When ATR is high, it indicates that there is a lot of volatility in the market, which can present opportunities for traders to profit. Conversely, when ATR is low, it indicates that the market is relatively stable, and traders may want to avoid entering trades at that time. Ichimoku Cloud: The Ichimoku Cloud, also known as Ichimoku Kinko Hyo, is a technical indicator that provides a comprehensive view of potential support and resistance levels, trend direction, and momentum. The indicator was developed by Japanese journalist Goichi Hosoda in the late 1930s and has gained popularity among traders in recent years. The Ichimoku Cloud consists of five lines, each providing a different view of the market: Tenkan-Sen: This line represents the average of the highest high and the lowest low over the past nine periods. Kijun-Sen: This line represents the average of the highest high and the lowest low over the past 26 periods. Chikou Span: This line represents the current closing price shifted back 26 periods. Senkou Span A: This line represents the average of the Tenkan-Sen and Kijun-Sen, shifted forward 26 periods. Senkou Span B: This line represents the average of the highest high and the lowest low over the past 52 periods, shifted forward 26 periods. The area between Senkou Span A and Senkou Span B is referred to as the "cloud" and is used to identify potential support and resistance levels. When the price is above the cloud, it indicates a bullish trend, and when the price is below the cloud, it indicates a bearish trend. Traders can also use the Tenkan-Sen and Kijun-Sen lines to identify potential entry and exit points, with a bullish crossover of the Tenkan-Sen above the Kijun-Sen indicating a potential buying opportunity, and a bearish crossover of the Tenkan-Sen below the Kijun-Sen indicating a potential selling opportunity. Conclusion: In conclusion, technical indicators are valuable tools for traders in the financial markets. The Average True Range (ATR) can be used to measure volatility in the market, while the Ichimoku Cloud provides a comprehensive view of potential support and resistance levels, trend direction, and momentum. By using these indicators in combination with other technical analysis tools and market knowledge, traders can make informed trading decisions and improve their chances of success. It's important for traders to experiment with different indicators and find the ones that work best for their trading strategy.
BITSTAMP:BTCUSDEducation
by JS_TechTrading
GBPJPYGBPJPY has been examined in different dimensions: 1- Strong supply and demand levels that I identify with my own indicator and system. 2- The structure of recently formed waves 3- Current market momentum 4- The structure of classical and price patterns In this idea, I identified the direction of the market in different ways and in the second step, I analyzed the potential of continuation or reversal. Usually, paying attention to the trend and strength of the trend can greatly increase the accuracy of the analysis. In general, I tried to describe the continuation of the movement in the simplest possible way in the diagram. ⚠️ Disclaimer: This is a personal opinion and you are responsible for any trading decisions.
Long
by HamidRamezani1992
The Stocashi A Heikin-Ashi style Stochastic RSIWhat up guys and welcome to the coffee shop. I have a special little tool for you today to throw in your toolbox. This one is a freebie. This is the Stochastic RS-Heiken-Ashi "The Stocashi" This is the stochastic RSI built to look like Heikin-Ashi candles. a lot of people have trouble using the stochastic indicator because of its ability to look very choppy at its edges instead of having nice curves or arcs to its form when you use it on scalping time frames it ends up being very pointed and you can't really tell when the bands turn over if you're using a stochastic Ribbon or you can't tell when it's actually moving in a particular direction if you're just using the K and the D line. This new format of Presentation seeks to get you to have a better visual representation of what the stochastic is actually doing. It's long been noted that Heikin-Ashi do a very good job of representing momentum in a price so using it on something that is erratic as the stochastic indicator seems like a plausible idea. The strategy is simple because you use it exactly the same way you've always used the stochastic indicator except now you can look for the full color of the candle. this one uses a gradient color setup for the candle so when the candle is fully red then you have a confirmed downtrend and when the candle is fully green you have a confirmed up trend of the stochastic however if, you a combination of the two colors inside of one candle then you do not have a confirmed direction of the stochastic . the strategy is simple for the stochastic and that you need to know your overall trend. if you are in an uptrend you are waiting for the stochastic to reach bottom and start curving up. if you are in a downtrend you are waiting for the stochastic to reach its top or its peak and curve down. In an uptrend you want to make sure that the stochastic is making consistently higher lows just like price should be. if at any moment it makes a lower low then you know you have a problem with your Trend and you should consider exiting. The opposite is true for a downtrend. In a downtrend you want to make sure you have lower highs. if at any given moment you end up with a higher high than you know you have a problem with your Trend and it's probably ending so you should consider exiting. The stochastic indicator done as he can actually candles also does a very good job of telling you when there is a change of character. In that moment when the change of character shows up you simply wait until your trend and your price start to match up. You can also use the stochastic indicator in this format to find divergences the same way you would on the relative strength index against your price highs and price lows so Divergence trading is visually a little bit easier with this tool. The settings for the K percent D percent RSI length and stochastic length can be adjusted at will so be sure to study the history of the stochastic and find the good settings for your trading strategy.
by CoffeeshopCrypto
4
"Swing Trading COIN: Bearish Divergence and Golden Pocket Setup"Confirm bearish divergence on RSI: Wait for a clear bearish divergence on the daily RSI chart for COIN . Watch for a break below the 50 EMA: Keep an eye on the price action and volume to confirm a break below the 50 EMA. Volume increasing as it breaks 53.66 could signal a stronger bearish move. Enter short position: Once the break below the 50 EMA is confirmed, consider entering a short position at a price level slightly below the 50 EMA. Set a stop-loss order at 58.10 to minimize losses if the price moves against the trade. Set take-profit level: Set a take-profit level at 44.62, but consider taking into account the whole golden pocket between 52.78 and 43.78. The golden pocket is a Fibonacci retracement level and could act as a significant support level. Monitor the trade: Monitor the trade closely and consider moving the stop-loss order to a trailing 5% once the trade is 15%+ in profit. This can help protect profits in case of sell exhaustion. Also, consider oversold levels as the price approaches the profit target. Note: This trade setup strategy is based solely on technical analysis and does not take into account any fundamental factors that may affect the price of COIN. It is important to conduct further research and analysis before making any trading decisions, and to only risk an amount you are comfortable with losing.
NASDAQ:COINShort
by OccamsPhazer
1
Trading Counter Trend GuideAnytime we are taking a trade we're trying to build a case to why it's a good trade. Here the counter trend trader would be thinking: -Price inside 4hr DBR demand zone -Price overextended ridding the bottom of the BB for 10x candles in a row -Stochastic RSI is oversold -Imbalance, correction, imbalance, with potential correction time. -Average Imbalance wave to downside = 4.2% -The average Correction is 3.2% Would I buy straight up? no, but I'm sure some traders might. instead of confirmation IMO is the better play + considering smaller risk + quicker trade management + quicker TP as the trade is aggressive.
CEducation
by MoneyballAustin
Counter Trend TradingAnytime we are taking a trade we're trying to build a case to why it's a good trade. Here the counter-trend trader would be thinking: -Price inside 4hr DBR demand zone -Price overextended ridding the bottom of the BB for 10x candles in a row -Stochastic RSI is oversold -Imbalance, correction, imbalance, with potential correction time. Average Imbalance wave to downside = 4.2% The average Correction is 3.2% Would I buy straight up? no, but I'm sure some traders might. instead of confirmation IMO is the better play + considering smaller risk + quicker trade management + quicker TP as the trade is aggressive.
C
by MoneyballAustin
RAD bullish pattern repetition?Similar pattern formation to Jul and Oct 2022. High Stoch and strength from a rising RSI can help boost the price over an estimated 3-month range. MACD at zero level cross. Good entry point. We want to see this MACD maintain well over the zero level along with an RSI maintained over 50. More peaks above 80 in Stochastics can help support the bullish thesis. Assumption is a Q3-2022 pattern repetition. A bullish engulfing candle is expected but is a lagging indicator on such a chart. It can be used as a trend confirmation.
RLong
by ashpat86
Stochastic + RSI + MACD zero cross strategy from backtest on SPYStrategy 1. Stochastic cross at 50 level 2. RSI cross at 50 level 3. MACD cross at 0 level 4. Engulfing Candlestick? 5. Level 2 Tape sentiment balance (Optional) Technical Analysis It's a simple technical analysis setup strategy for bullish or bearish trading setup in both bullish and bearish sentiment scenarios. All levels in the indicators are at standard default settings. Step One: Look at the Stochastic indicator cross at 50 level and a cross over the signal line. This will be the first check and we want the cross to occur at the 50 level. Step Two: Check the RSI and need a cross at 50 level. This is the second confirmation. Step Three: Check the MACD cross and it's best to wait for the cross to happen at the zero line. This has a lower instances from occurring but it helps to avoid fake-outs that MACD is prone to showing. Step Four: Look for an engulfing candlestick pattern in the chart for a final confirmation. Step Five (Optional): If you have access to Level II quotes and the Time&Sales, watch for a momentum into the Ask side for a bullish sentiment or the Bid side for a bearish sentiment. Also you'll need to be familiar with tape reading on the volume and speed for better entry or exit.
AMEX:SPYEducation
by ashpat86
BTC/USD Sideway what can we plan?Hi everyone and Happy new years 2023 From Thailand. Wishing you happy and wealthy. Okay let talk about BTC, we surely BTC are in downtrend and now are sideway in downtrend after that no one know it will go to lower low or make reversal pattern but we can do trading by use Stochastic you see in Charts Stochastic quite affect in sideway, my advise is when Stochastic are Overbought and clash with resistant that are Shorts/Sell Signal and Stochastic are Oversold and clash with support that are Long/Buy Signal. However you have to follow closely because range movement of BTC it's so narrow, keep do risk management if ratio of risk/reward less 1:2 it's not worthy to take that position. That my idea hope you get some ideas to trade. Ps. Market always right and should not fight with market.
COINBASE:BTCUSD
by Nicehappy
The "Hidden RSI Divergence" and a LIVE TRADEFinding regular divergences is an easy thing especially when you're using the heiken Ashi algo oscillator but finding hidden divergences can be a little bit more complex. So in today's video I'm going to show you how to find hidden divergences and what you should do with them. Obviously step number one is go to the community scripts on tradingview and search for Heiken Ashi Algo Oscillator If you Have any trouble finding it just follow this link What you're watching me do in this video is identifying hidden Divergence has and I am doing a live trade. I am also discussing the importance of setting your support and resistance levels as well as looking at your charts, doing your analysis on a high time frame and then doing your actual trades on a lower time frame. In the previous video as I've mentioned before anything happening between the green and red or + 10 + - 10 range of the oscillator anything inside that area is irrelevant you don't care about heiken Ashi values or oscillators values or anything inside that area so when you have your RSI cross for example above the 0 level you also need a hike and as you candle to close above + 10 when you have your RSI value across below the 0 leveled you also need a heiken Ashi candle to close below the -10 level. One thing to note is the major difference between regular divergences and hidden divergences is this. When looking for Regular Divergence has you are looking for highs above the +10 of the oscillator or you are looking for Lowe's below the -10 level of the oscillator. However with hidden Divergences it is different. a hidden Divergence will be the Lowe's above + 10 and the highs below -10. So at this point you are looking for the highway 6 or the low wicks in those areas. But ultimately you still trade them the same way. Meaning that if your RSI slope is to the down side then you have to be ready for your price to move down. If the slope of your RSI Divergence is to the upside then you have to be ready for price to move up. I could do my best to tell you in this dialogue how to do this trade however it would be best for you to just watch this video and ask questions below.
Education
by CoffeeshopCrypto
6