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# Indicator: Premier Stochastic Oscillator

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The PSO             , developed by Lee Leibfarth, is a rewired version of a short-period stochastic . This provides a quick response to changes in market direction. This highly sensitive indicator allows for early anticipation of price turns and can be used to establish definitive trading zones that identify potential trading opportunities.

Rules as suggested by Mr.Lee:

(1) Premier stochastic crosses below 0.90
(2) premier stochastic crosses below 0.20

(1) Premier stochastic crosses above -0.90
(2) premier stochastic crosses above -0.20

```//
// @author LazyBear
//
study("Premier Stochastic Oscillator [LazyBear]", shorttitle="PSO_LB")
stochlen = input(8, title="Stoch length")
smoothlen = input(25, title="Smooth length")
sk = stoch( close, high, low, stochlen)
len = round(sqrt( smoothlen ))
nsk = 0.1 * ( sk - 50 )
ss = ema( ema( nsk, len ), len )
expss = exp( ss )
pso = ( expss - 1 )/( expss + 1 )
plot( pso, title="Premier Stoch", color=black, linewidth=2 )
plot( pso, color=iff( pso < 0, red, blue ), style=histogram )
plot(0, color=gray)
plot( 0.2, color=blue, style=3 )
plot( 0.9, color=blue)
plot( -0.2, color=red, style=3)
plot( -0.9, color=red )```

## Related Ideas

Not to second guess you on this - but the short/long trade parameters seem reversed from looking at the chart. It would seem when over 0.90 to go short, not go long... -0.90 go long, not short.

i stand corrected...

Outer Threshold Setups
Outer threshold setups form when the PSO crosses out of the outer limits and then returns. As previously mentioned, price has a tendency to pullback and then return to overbought or oversold areas. This can provide a good entry point to:

Go long when the PSO crosses below the upper threshold (0.9 in this example) after it has already crossed above the threshold. A short-term reversal may occur where price returns to the extreme overbought territory.
Go short when the PSO crosses above the lower threshold (-0.9 in this instance) after it has already penetrated the lower threshold. Again, a short-term reversal may occur as prices make another push lower.
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