Stockhastic Oscilator is the indicator that can help us to solve the problem about market that overbought (already to many people buy that stocks) or oversold (to many people sell that stocks).

Stockhastic can tell you how many power that market have to going up or going down. In fact, stockhastic can help us to read the market so we can decide to buy or sell the stocks.

Original Stockhastic Oscilator made by Dr. George Lane, there is 2 line named %K (fast Line) and %D (slow line). %K line moving faster than %D line . %D is a moving average line %K. %D is the trigger at the markets. Okay! That’s to complicated now I will tell you with the simple word :p

If you see in the chart above you will see 2 lines with the red colour, we call it with overbought and oversold area. If blue line cross the red line at 80 (circle a) we get market start heating or we call overbought. If your blue line cross down red line at 20 (circle b) meaning the market will going oversold. Let’s we simple this conditions!

1.    If Blue Line %K crossing Up red line %D mean buy Signal

2.   If Blue Line %K crossing down red line %D mean Sell Signal

3.   If Blue Line at Area 90 prepare for sell signal

4.   If Blue line at area 10 prepare for buy signal

Can we use only one technical analysis indicator to catch the market? Of course no! You must combo with the other technical analysis indicator, you must using stockhastic and simple moving average to catch the conditions of the market