Fast Stochastic %K Change Direction
The Fast Stochastic Oscillator is a technical
analysis tool used to measure the momentum of a stock's price movement. This is
done by comparing the latest closing price of the stock with its highest and
lowest prices over a specific period, typically 14 periods.
Calculation of the Fast
Stochastic involves finding the difference between the latest closing price and
the lowest price over the specific period, dividing that by the difference
between the highest and lowest prices over the same period, and multiplying by
100 to produce a percentage value between 0 and 100.
Traders use the Fast
Stochastic to identify if a stock is overbought or oversold. When the Fast
Stochastic rises above 80, the stock is overbought, while a fall below 20
indicates oversold conditions. This information can be useful in identifying
potential price reversals or corrections in the stock's price.
This strategy is based on Fast
Stochastic Oscillator %K (black line). If %K changes direction upwards i.e.
FS%K(t2)>FS%K(t1) < FS%K(t) then a buy signal is generated. A sell
signal is generated when %K changes direction downward i.e.
FS%K(t2)<FS%K(t1) > FS%K(t), where FS%K(t) is a current value of Fast
Stochastic %K, FS%K(t1) is yesterdays value Fast Stochastic %K and FS%K(t2) is
a value of Fast Stochastic %K two days ago.
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