Finance Gorila
Telegram channel

Risk warning CFDs, forex and crypto are high risk and most retail CFD accounts lose money. Nothing here is investment advice and no result is guaranteed. We may earn commissions from partners.High-risk products. Not investment advice. Nothing is guaranteed.

Checking market sessions…

Stochastic and Stochastic RSI

Oscillators based on where price sits in its recent range: the 80/20 zones, %K–%D crosses and how to use Stoch RSI.

What the Stochastic is

The Stochastic oscillator was popularised by George Lane in the 1950s. It shows where the close sits inside the high–low range of the last N bars: near the top of the range it is close to 100, near the bottom close to 0.

%K(Close − Lowest low 14) / (Highest high 14 − Lowest low 14) × 100
%D3-period average of %K
TradingViewStochastic (14, 1, 3); Stochastic RSI (3, 3, 14, 14)
Levels80 / 20

How to read it

  • Above 80: overbought; below 20: oversold.
  • %K crossing above %D below 20 is a buy signal; crossing below %D above 80 is a sell signal.
  • Stochastic divergence reads the same way as RSI divergence.

Stochastic RSI

Stoch RSI (Tushar Chande and Stanley Kroll, 1994) applies the Stochastic formula to RSI instead of price. It is much more sensitive and hits 0 and 100 often, so it suits timing entries inside a trend you have already identified.

How to trade it

  1. Find the trend with a moving average or price structure.
  2. In an uptrend take only buy signals: wait for the Stochastic to drop below 20, then %K to cross above %D.
  3. Stop below the pullback low; ignore every counter-trend sell signal.
Watch outBecause it is so sensitive, the Stochastic gives many false signals in strong trends. Don't sell just because it is above 80.

Try it on a chart

Educational content only, not investment advice. Practise on a demo account before using real money.