Slow Stochastic
Type
Momentum oscillator
Short introduction
Because the underlying "Fast Stochastic" indicator often reacts too fast to price changes, therefore the Slow Stochastic was introduced.
Statement
A 3-period GD on the Fast Stochastic reduces the number of supposed reversal points.
Formula/calculation
%D = Slow %K = MAn on %K
Slow %D = MAn on %D
Interpretation
Trading rules:
- If the %D line and the Slow %D line fall below the 20% level, the market appears oversold.
- If the %D line crosses the Slow %D line from the bottom to the top, a buy signal is generated. Also, the intersection of the D% line with the 20% line from the bottom to the top generates a buy signal.
- The market appears to be overbought when both lines are above the 80% level.
Default setting
Example: Slow Stochastic
