Technical Analysis of Stochastic Oscillator Indicator

A lot of Stock Indices trading information can be gathered from the shapes & duration of the market tops & bottoms of the stochastic oscillator Stock Indices trading indicator.

The amount of time that the Indices price stays overbought or oversold is an important factor when analyzing the strength of the Indices market trends.

Stock Index Market Tops

Narrow Stock Index market top that doesn't reach very high above 80%

Narrow Stock Index market tops means that the bulls are weak, & that the Indices bears have overpowered the Indices bulls very quickly. This means that the Indices bears might push the Indices price further down without much resistance from the Indices bulls.

Very high, wide Indices market tops

Wide Indices market tops mean that the Indices bulls are very powerful much more than the Indices bears & the ensuing short term trend reversal (retracement), will be very short lived. The retracement on the stochastic oscillator Stock Indices trading indicator won't even reach the oversold levels before the stochastic oscillator Stock Indices indicator moves back to the overbought levels.

Stock Index Market Bottoms

A narrow Stock Index market bottom that doesn't reach very deep below 20%

The narrow Stock Index market bottom means that Stock Indices bears are weak in their attempt to push the Indices price down, Indices bulls have gained control of the Indices price pretty fast so the Indices price movement upwards will continue for a while. And the upwards Indices market trend will continue for a while.

Very wide, deep Stock Indices market bottoms

A wide Indices market bottom is a sign that the Indices bears are very strong and the Indices sellers are in control of the Indices price, therefore any retracement upwards will not stay for long.