What Is A Stochastic Oscillator?
A stochastic oscillator is a momentum indicator comparing a particular closing price of a security to a range of its prices over a certain period of time. The sensitivity of the oscillator to market movements is reducible by adjusting that time period or by taking a moving average of the result. It is used to generate overbought and oversold trading signals, utilizing a 0-100 bounded range of values.
KEY TAKEAWAYS A stochastic oscillator is a popular technical indicator for generating overbought and oversold signals.
It is a popular momentum indicator, first developed in the 1950s.
Stochastic oscillators tend to vary around some mean price level, since they rely on an asset's price history
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