Returns the Stochastic D (signal line) from the stochastic oscillator indicator.

Syntax:

Where:

  • period= calculation period of the stochastic oscillator (default period is 14)
  • %Kperiod= moving average period used to smoothed the stochastic value (default is 3, 1=Fast, 3=Slow)
  • %Dperiod= smoothed period of the signal line of the stochastic oscillator
  • “price1”, “price2” and “price3” are optional. By default the stochasticD will be calculated with Close on the High/Low scale (same as the internal platform indicator). But you can adjust it with any other price or data series (e.g. StochasticD[N,K](close,close,close) or StochasticD[N,K](var1,var2,var3) )

Fast/Slow Stochastics Calculation : The first parameter is the number of days used to calculate %K, the second is the number of days to be considered for the moving average of %K (generally 1 for Fast Stochastic and 3 or 5 for Slow Stochastic), the third is the number of days to be considered for the moving average of %D.

Interpretation : It is an overbought/oversold indicator depending on its position relative to the 0 level. It also gives good divergence signals.

A bullish divergence occurs when the stock price makes new lows while the Stochastic fails to make new lows.

A bearish divergence occurs when the stock price makes new highs while the Stochastic fails to make new highs.

Related entries

Share this