Analysis of Stochastic Oscillator

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

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

Trading Market Tops

Narrow market top that doesn't reach very high above 80%

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

Very high, wide commodity market tops

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

Trading Market Bottoms

A narrow market bottom that does not reach very deep below 20%

The narrow market bottom means that commodity bears are weak in their attempt to push the price down, the commodity 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 market bottoms

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