Stochastic Oscillator Silver Technical Analysis & Stochastic Oscillator Trading Signals

Developed by George C. Lane

The Stochastic Oscillator is a momentum indicator - it shows the relation between the current closing xagusd price relative to the high and low range over a given number of n periods. Oscillator uses a scale of 0-100 to draw its values.

This Oscillator is based on the theory that in an up silver trend market the xagusd price closes near the high of the xagusd price range and in a downwards trending market the xagusd price will close near the low of the xagusd price range.

The Stochastic Lines are drawn as 2 lines- %K and %D.

• Fast line %K is the main
• Slow line %D is the signal

3 Types of Stochastics Silver Oscillators: Fast, Slow and Full Stochastics

There are 3 types are: fast, slow & full Stochastic. The 3 indicators look at a given chart period for examples the 14-day period, & measures how the xagusd price of today’s close compares to the high/low range of the time period that is being used to calculate the stochastic.

This oscillator works on the principle that:

• In an upward silver trend, xagusd price tends to close at the high of the candlestick.
• In a downward silver trend, xagusd price tends to close at the low of the candlestick.

This silver technical indicator shows the momentum of the Silver trends, & identifies the times when a market is overbought or oversold.

XAGUSD Trading Analysis & Generating Trading Signals

Most common techniques used for technical analysis of the Stochastic Oscillators to generate silver signals are cross overs signals, divergence trading signals & over bought oversold areas. Following are the techniques used for generating signals

XAGUSD Trading Crossover Trading Signals

Buy signal - % K line crosses above the %D line (both lines heading upwards)

Sell signal - %K line crosses below the %D line (both lines heading downwards)

50-level Crossover:

Buy signal - when stochastic lines cross above 50 a buy xagusd trade signal is generated.

Sell signal - when stochastic lines cross below 50 a sell xagusd trade signal is generated.

Divergence XAGUSD Trading

Stochastic is also used to look for divergences between this indicator and the xagusd price.

This is used to determine potential silver trend reversal silver signals.

Upwards/rising silver trend reversal- identified by a classic bearish divergence

Silver Trend reversal - identified by a classic bearish divergence

Downward/descending silver trend reversal- identified by a classic bullish divergence

Silver Trend reversal - identified by a classic bullish divergence

Overbought/Oversold Levels on Technical Indicator

Stochastic is mainly used to identify potential overbought and oversold conditions in xagusd price movements.

• Overbought values greater than 70 level - A sell silver signal occurs when the oscillator rises above 70% and then falls below this level.

Overbought - Values Greater 70

• Oversold values less than 30 level - a buy silver signal is generated when the oscillator goes below 30% and then rises above this level.

Oversold - Values Less Than 30

Trades are generated when Stochastic Oscillator crosses these levels. However, overbought/oversold levels are prone to whipsaws especially when the xagusd trading market is trending upward or downward.