Stochastic Oscillator

The stochastic oscillator is a momentum indicator used in technical analysis to compare a security’s closing price to its price range over a specified period. The stochastic oscillator (or stochastic indicator) is a leading indicator, as it gives advanced signals before it is reflected in the price behaviour.

It places significant emphasis on the momentum of asset prices, enabling it to pinpoint both overbought and oversold levels in the crypto market when applied correctly. For instance, when the oscillator returns a value above 80, it suggests that the asset might be overbought and could be due for a correction. Conversely, a value below 20 might indicate that the asset is oversold and could be due for a rise.