Stochastic Oscillator

This oscillator was created by George Lane to provide an indication of momentum.

%K = 100 x (closing-low)/(high-low)

%D = 3 simple moving average of %K

The high and low prices in %K generally are the highs and lows of the previous 14 days.

In the oscillator below, %D is the red dotted line and %K represented by the blue line (the graph is EURGBP).

Stochastic Oscillator

The idea behind these lines is that when they cross, then there is an indication to buy/sell. However, real-time trading is never as simple as this. But what can be seen is that there are correlations between the graph and the oscillator and as a result the latter will inevitably be useful in the context of EURGBP.