Stochastic Indicator Crossover Signals
One way to interpret the forex trading signals provided by the Stochastic Oscillator indicator is similar to a moving average cross over forex trading strategy. In the Stochastic oscillator indicator, a crossover forex signal happens when the %K and %D lines cross over. These crossover forex signals should be taken with scrutiny as, out of the forex stochastics oscillator trading signal interpretations discussed so far, they produce the most forex trading whipsaws. Whipsaws or False forex trading signals are especially common in the Fast Stochastic Oscillator Indicator version.
Stochastic Oscillator Crossover Forex Trading Signals:
- For a Sell forex signal, a trader looks for the % K line to move below % D line.
- For a Buy forex trade signal, a trader looks for % K line to move above % D line.
Since stochastic crossovers forex trading signals of %K and %D are often unreliable, they should be verified with other forex indicators.
The Stochastic Oscillator Indicator Center-line
The stochastic oscillator center-line lies at the 50% level in the stochastic indicator panel. It implies that there is a balance between bulls and bears. Situations when the stochastic indicator crosses the center-line can give an insight into whether the buyers or sellers will begin to control the forex market trend.
Stochastic Oscillator Center-line Forex Crossovers Signals
- If the Stochastic oscillator indicator is staying below the center-mark (between 40%-50%) and crosses up, then it is an indication that the forex bulls are taking control of the forex market.
- If the Stochastic oscillator indicator is staying above the center-mark (around 50%-60%) and then crosses below the center-mark, it can be an indication that the forex bears have taken control of the forex market.
