STOCH (Stochastic Oscillator)

Indicator Description

STOCH (Stochastic Oscillator) is a momentum indicator that measures the strength of price momentum by comparing the current price to the highest and lowest prices over a specified period.

Function Information

• Function Name: STOCH
• Input Parameters:
  • High: High price
  • Low: Low price
  • Close: Closing price
• Parameter Settings:
  • fastk_period: Fast K period, default 5
  • slowk_period: Slow K period, default 3
  • slowk_matype: Slow K moving average type, default 0
  • slowd_period: Signal line period, default 3
  • slowd_matype: Signal line moving average type, default 0
• Output:
  • slowk: Slow K line
  • slowd: Slow D line

Calculation Principle

STOCH is calculated using the following formula:

%K = 100 * (Close - Lowest Low) / (Highest High - Lowest Low)
%D = SMA(%K, slowk_period)

Where:

• Close is the current closing price
• Lowest Low is the lowest price in the period
• Highest High is the highest price in the period
• SMA is Simple Moving Average

Usage Scenarios

1. Overbought/Oversold Analysis
2. Trend Confirmation
3. Trading Signal Generation
4. Divergence Analysis

Usage Recommendations

1. %K > 80 indicates overbought conditions
2. %K < 20 indicates oversold conditions
3. Watch for %K and %D crossovers
4. Pay attention to divergence patterns