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Stochastic %K (14)

Stochastic %K (14)

Stochastic %K compares the current close to the high–low range over the last 14 periods. High values mean price is near recent highs.

Where it fits

Stochastic %K (14)→Momentum

Stochastic %K compares the current close to the high-low range over the last 14 periods. High values mean price is near recent highs.

The calculation:

%K = ((Close - Lowest Low) / (Highest High - Lowest Low)) × 100
Where: Lowest Low and Highest High are over 14 periods

Interpreting %K values:

<ul>
  • %K > 80: Overbought territory; price near top of range
  • %K < 20: Oversold territory; price near bottom of range
  • %K = 50: Price at middle of recent range

    • Trading applications:

    • Overbought/oversold: Extreme readings can indicate reversal potential
    • Momentum gauge: Shows where price sits within its recent range
    • Crossovers: %K crossing %D generates trading signals
    • Divergences: Price/stochastic divergences warn of potential reversals

    Important considerations:

    • Fast vs. slow: Raw %K is "fast"; smoothed version is "slow" stochastic
    • Trending markets: Can stay overbought/oversold for extended periods
    • False signals: Works best in ranging markets; less reliable in trends
    • Confirmation needed: Combine with other indicators for better results

    The stochastic oscillator is popular for identifying potential reversal points, particularly when combined with support/resistance levels and trend analysis.