Technical Analysis of Stochastic Oscillator Indicator

A lot of stock indices information can be gathered from the shapes and duration of the stock indices market tops and bottoms of the stochastic oscillator stock index technical indicator.

The amount of time that the stock indices instrument stays overbought or oversold is an important factor when analyzing the strength of the stock indices market trends.

Stock Index Market Tops

Narrow stock indices market top that does not reach very high above 80 %

Narrow stock index trading market tops means that the bulls are weak, and that the stock indices bears have overpowered the stock indices bulls very quickly. This means that the stock indices bears might push the stock index price further down without much resistance from the stock indices bulls.

Very high, wide stock indices market tops

Wide stock indices market top mean that the stock indices bulls are very powerful much more than the stock indices bears and the ensuing short term stock indices trend reversal (retracement), will be very short lived. Retracement on the stochastic oscillator stock indices technical indicator will not even reach the oversold levels before stochastic oscillator stock indices technical indicator moves back to the over bought levels.

Stock Index Market Bottoms

A narrow stock indices market bottom that does not reach very deep below 20 %

The narrow stock indices market bottom means that stock indices bears are weak in their attempt to push the stock index price down, the stock indices bulls have gained control of the stock index price pretty fast so the stock index price movement upwards will continue for a while. And the upward stock indices market stock indices trend will continue for a while.

Very wide, deep stock indices market bottoms

A wide stock indices market bottom is a sign that the stock indices bears are very strong and the stock indices sellers are in control of the stock index price, therefore any retracement upwards will not stay for long.