Stochastic Oscillator in Forex

The Stochastic Oscillator is a popular technical indicator used in Forex trading to assess overbought and oversold conditions in the market. It compares the current closing price of a currency pair to its price range over a specified period. The indicator generates values between 0 and 100, with readings above 80 indicating overbought conditions and readings below 20 indicating oversold conditions. Traders use the Stochastic Oscillator to identify potential trend reversals or continuation patterns. A crossover of the %K line and the %D line, or divergence between the indicator and price action, can be considered as signals for potential trading opportunities.