The oscillator, developed by George Lane, presents the location of the closing price of a stock in relation to the high and low range of the price of a stock over a period of time. Lane has said that the oscillator does not follow price or volume or anything similar. He indicates that the oscillator follows the speed or momentum of price.
Traditionally, readings over 80 are considered in the overbought range, and readings under 20 are considered oversold. Please note that, very strong trends can maintain overbought or oversold conditions for an extended period and traders should look to changes in the oscillator for clues about future trend shifts. It is advised to check the higher timeframe of your trading timeframe and see where you are in the “big picture”
Signal crosses, intersection of and its signal line is considered to be a signal that a reversal may be in the works
Divergence between the oscillator and trending price action is also seen as an important reversal signal
Lane also reveals in interviews that, as a rule, the momentum or speed of the price of a stock changes before the price changes itself. In this way, the oscillator can be used to foreshadow reversals when the indicator reveals or divergences. This signal is the first, and arguably the most important, trading signal Lane identified.
What is X ?
Stochastic X, is essentially an indicator of an indicator, providing calculation to some of well known indicators, such as , , OBV, etc. This means that it is a measure of selected specific indicator relative to its own high/low range over a user defined period of time.
Features of X
1- Displays of and indicator plus a companion indicator (companion display can be disabled from user dialog box)
Stoch Source plus PMA, where Source is close price and PMA refers to Price Distance to its Moving Average (for further details you may check my study of Price Distance to its MA by DGT , and different application of distance concept available with “MACD-X, More Than MACD" And “P-MACD”)
Stoch plus RSI, , developed by Tushar Chande and Stanley Kroll, is a build-in indicator available on Trading View, where X adds as a companion indicator to
Stoch and MFI, where is Index, measures buying and selling pressure through analyzing both price and
Stoch OBV + VO, Where OBV is , is a that measures positive and negative flow. VO stands for Oscillator which aims to confirm a market turnaround or trend reversal
Stoch EWO + EWO, EWO stands for
By default the threshold levels are indicated and are displayed differently for the regular or . Overbought band (70-80), oversold band (20-30) and middle line (0) are emphasized
Warning: Centered Oscillators base line is moved from 0 to 50 to better suit with X, which is applied to PMA , VO and EWO
2- Can be plotted along with Stoch in the same window using the same scaling
To avoid misinterpreting the area between X and its Signal Line is highlighted automatically in case is selected to be plotted
3- Squeeze Indicator added as Add-on in the bottom of the X
During volatile market conditions the oscillator has been known to produce false signals. One way to help with this is to take the price trend as a filter, or basic chart pattern analysis can help to identify major, underlying trends and increase the X's accuracy.
This study implements Squeeze Indicator to help and add additional insight for filtering false signals. Blue diamond shapes indicates the squeeze release, that is increased and according to momentum direction the buy/sell possibility can be considered. Orange ones displays consolidation periods, that is low and the market is assumed to be in squeeze and no trade is recommended. in this phase.
Disclaimer: Trading success is all about following your trading strategy and the indicators should fit within your trading strategy, and not to be traded upon solely
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thanks to take your time and notify your findings,
Companion indicators RSI, MFI, VO are OK at anytime frame, PMA and EWO have issues in lowertime frames
for PMA i was aware, it is presents the idea that i published earlier named as "Price Distance to its MA by DGT", where i applied a differnet solution so it fits all timeframes. The solution which i applied there will not fit this one. I have to do further anlysis for both PMA and EWO, once i come up with somthing worth i will notify
BTW, you may find details for the solution that i applied for PMA in the folowing study