Analysis of Stochastic Oscillator Indicator

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

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

Crude Trading Market Tops

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

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

Very high, wide oil market tops

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

Crude Trading Market Bottoms

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

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

Very wide, deep oil market bottoms

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