What is Stochastic?
The Stochastic indicator helps determine when the price of an asset is about to change direction, with signals coming up when the asset is at the peak of a buy or peak sell.
If the asset at the peak of the purchase, may be due to the occurrence of a reversal down, and if the peak of the sale, may be due to the presence of a reversal to the top.
Traders use the Stochastic to help them break out of existing trades before the trend changes. They also use it to enter trades immediately after starting a new trend.
The Stochastic chart includes two moving rates
The Stochastic is composed of two moving averages lines that pass from and into three distinct areas on the chart - overbought territory at the top, neutral territory in the middle and oversold area below.
In standard settings, the overbought zone occurs between 80 and 100 levels on the index chart while oversold territory is between 0 and 20.
