Stochastic Indicator Crossover Signals

One way to analyze the forex signals provided by the Stochastic Oscillator indicator is similar to a moving average cross over trading strategy. In the Stochastic oscillator indicator, a crossover forex signal happens when the %K & %D lines cross over. These crossover forex signals should be taken with scrutiny as, out of the forex stochastics oscillator signal interpretations discussed so far, they produce the most forex trading whipsaws. Whipsaws or False forex signals are especially common in Fast Stochastic Oscillator Indicator version.

Stochastic Oscillator Crossover Forex Signals:

• For a Sell forex signal, a trader looks for the %K line to move below the %D line.
• For a Buy forex signal, a trader looks for the %K line to move above the %D line.

Since stochastic crossovers forex signals of %K and %D are often unreliable, they should be verified with other technical indicators.

The Stochastic Oscillator Indicator Center-line

The stochastic oscillator center-line lies at the 50% level in the stochastic indicator panel. It implies that there is a balance between bulls and bears. Situations when the stochastic indicator crosses the center-line can give an insight into whether the buyers or sellers will begin to control the forex market trend.

Stochastic Oscillator Center-line Forex Trading Crossovers Signals

• If the Stochastic oscillator indicator is staying below the center-mark (between 40%-50%) and crosses up, then it is an indication that the forex bulls are taking control of the forex market.
• If the Stochastic oscillator indicator is staying above the center-mark (around 50%-60%) and then crosses below the center-mark, it can be an indication that the forex bears have taken control of the forex market.