‼️ Stochastic is one of the most popular technical analysis indicators that helps traders identify potential trend reversal points. Imagine it as a compass that shows where the market is heading. $TON
🧲 Stochastic is an oscillator that compares the current closing price with the price range over a certain period. It shows how close the current price is to the upper or lower boundary of this range.
How does it work? Stochastic consists of two lines:
📌 %K: The main line that shows the current price position relative to the range.
📌 %D: The moving average line of %K, which smooths its fluctuations.
Both lines fluctuate in the range from 0 to 100. $ETH
How to use Stochastic?
♦️Overbought/Oversold:
⚡️ When the Stochastic lines are above 80, it means the market is overbought, and the price may soon reverse downwards.
⚡️ When the Stochastic lines are below 20, it means the market is oversold, and the price may soon reverse upwards.
♦️Crossing lines:
⚡️ When the %K line crosses the %D line from above downwards, it could be a signal to sell.
⚡️ When the %K line crosses the %D line from below upwards, it could be a signal to buy.
♦️ Divergence:
⚡️ Divergence occurs when the price moves in one direction, while the Stochastic lines move in another.
⚡️ This could be a signal for a trend reversal.
Example:
Imagine you are analyzing the Bitcoin chart. The Stochastic lines are above 80, indicating that the market is overbought. You also see that the %K line crosses the %D line from above downwards. This could be a signal to sell Bitcoin. $NOT
Stochastic is a powerful tool that can help you make informed decisions in the cryptocurrency market. But remember, no indicator guarantees profit.
