The StochasticD function in ProBuilder language is used to calculate the ‘D’ line, or the signal line, of the Stochastic Oscillator, which is a popular momentum indicator in technical analysis. This function helps in identifying potential reversal points by indicating overbought or oversold conditions in the price of an asset.

Syntax:

StochasticD[period,%Kperiod,%Dperiod](price1, price2, price3)

• period: The number of periods used to calculate the %K line of the stochastic oscillator. The default is 14.
• %Kperiod: The smoothing period for the %K value. Default is 3. A value of 1 indicates a Fast Stochastic; values of 3 or 5 indicate a Slow Stochastic.
• %Dperiod: The moving average period for the %D line, which is derived from the %K values. This is typically set to 3.
• price1, price2, price3: Optional parameters to specify the price series used in calculations. By default, these are set to the high, low, and close prices of the asset.

Example Usage:

StochasticD[14,3,3](close, high, low)

This example calculates the Stochastic D line using the default 14-period lookback for %K, a 3-period smoothing for %K, and a 3-period smoothing for %D, based on the closing, high, and low prices.

Additional Information:

The Stochastic Oscillator consists of two lines: the %K line, which measures the level of the close relative to the high-low range over a given period of time; and the %D line, which is a moving average of the %K line. The StochasticD function specifically calculates the %D line. This line is important for identifying divergences and overbought/oversold conditions. A common interpretation is that values above 80 indicate an overbought condition and values below 20 indicate an oversold condition, suggesting potential reversal points.

Understanding the behavior of the StochasticD can aid in making informed decisions about potential price movements, especially when combined with other indicators and analysis techniques.