- or is the white line.
- %K is the aqua line
- %D is the orange line
- The purple is the range going from 30 (oversold) at the bottom to 70 (overbought)
- The top dotted line indicates the price being overbought on the
- The bottom dotted line indicates the price oversold on the
I mainly use both indicators to spot divergence/ potential upcoming turning points (tops or bottoms).
For example on the chart the white line shows the price of Bitcoin Rising
While the yellow line shows the declining and the red stayed more or less at the same level.
Another way to use this indicator is to use the aqua line crossing above the orange line as an entry for a long trade this strategy is most useful when both are near the bottom of the range. The opposite is true for short trades but
both should be combined with other indicators such as moving averages support levels or for best results.
Generally is more useful in trending markets & the is more useful in sideways or choppy markets.
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in a publication is governed by House Rules. You can favorite it to use it on a chart.