Analysis of Stochastic Oscillator Indicator

A lot of cfd information can be gathered from the shapes and duration of the cfd market tops and bottoms of the stochastic oscillator indicator.

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

Market Tops

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

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

Very high, wide cfd market tops

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

Market Bottoms

A narrow cfd market bottom that doesn't reach very deep below 20%

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

Very wide, deep cfd market bottoms

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