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Understanding Momentum in Investment Technical Analysis
book

Understanding Momentum in Investment Technical Analysis

by Michael C. Thomsett
June 2019
Intermediate to advanced content levelIntermediate to advanced
146 pages
3h 15m
English
Business Expert Press
Content preview from Understanding Momentum in Investment Technical Analysis

CHAPTER 7

The Stochastic Oscillator

Overview: The stochastic oscillator is like relative strength index (RSI) in the sense that it sets up an index valued between zero and 100. However, it employs two moving averages and identifies overbought above 80 and oversold below 20. As an alternative, it adds value to momentum tracking when used in conjunction with RSI, or for confirmation of other oscillators and indicators.

Among oscillators, the stochastic may be the most obscure. The word “stochastic” is a statistical term meaning random probability, which at first glance is not especially reassuring to the analyst on an unending quest for predictability. However, despite its odd name, the stochastic oscillator adds an element of confirmation to what ...

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Publisher Resources

ISBN: 9781949991635