Stochastic by Edwin K

What it shows

This indicator measures momentum and overbought/oversold zones using the Stochastic Oscillator (%K and %D).
It helps you see when price momentum is **turning**, **overextended**, or **ready to reverse**.

How to read it

Blue line (%K): Fast momentum line — reacts quickly to price.
Orange line (%D):Slow signal line — confirms direction.
Zone shading:
Above 80 = Overbought zone (price stretched upward)
Below 20 = Oversold zone (price stretched downward)
Bar turns yellow: momentum warning — possible reversal or pullback coming.

Yellow signal meaning

The bar turns yellow when:

%K crosses below 80 (momentum leaving overbought zone → early sell signal) or
%K crosses above 20 (momentum leaving oversold zone → early buy signal).

This is your momentum shift alert — the market may start reversing or correcting soon.


How to trade it

1. Reversal entries

Buy when %K crosses up through 20 (oversold to bullish).
Sell when %K crosses down through 80 (overbought to bearish).
Yellow bars confirm the shift.

2. Trend filter
For better accuracy, confirm with trend direction (e.g., EMA or price structure):

Only take buy signals when price is above an EMA (e.g., 50 EMA).
Only take sell signals when price is below it.