Stochastic: Top or bottom of the range?
How the slow stochastic works, what %K and %D crossovers mean below 20 and above 80, and when it works best, with practice on real NSE charts.
Stochastic shows where price sits in its range
Stochastic compares today’s close with the highest and lowest prices of the last 14 days. 100 means it closed at the top of that range, 0 means at the bottom.
What to look for
- %K (blue) is the fast line. %D (orange) is a smoothed version.
- Above 80: near the top of the range. Below 20: near the bottom.
- A %K cross above %D below 20 means buyers are stepping back in.
Stochastic shines when a stock moves sideways. In a strong trend it can stay above 80 or below 20 for weeks.
This stock has been swinging between about ₹300 and ₹330. Near ₹300, Stochastic dropped below 20. What is it telling you?
- Price is near the top of its recent range
- The company is in trouble
- Price is near the bottom of its recent range
Show the answer
Price is near the bottom of its recent range. Below 20 means today’s close is near the lowest price of the last two weeks. In a sideways market that is the bottom of the range.
Buying the bottom of a range
For weeks the stock swung between ₹300 and ₹330. At the bottom of the range Stochastic fell below 20, then %K crossed back above %D. In a sideways market that is often where buyers return.
Check the trend first. In a strong downtrend, "oversold" can keep getting more oversold.
Practise Stochastic, free
Reading about it is step one. In MarketSeekho you see a real NSE chart with the future hidden, call Bull or Bhalu, say why, and get graded on your reasoning, not luck.
Common questions
What is Stochastic?
Stochastic compares today’s close with the highest and lowest prices of the last 14 days. 100 means it closed at the top of that range, 0 means at the bottom.
What should I look for with Stochastic?
%K (blue) is the fast line. %D (orange) is a smoothed version. Above 80: near the top of the range. Below 20: near the bottom. A %K cross above %D below 20 means buyers are stepping back in.
How can I practise reading Stochastic for free?
MarketSeekho has a free four-page chapter on Stochastic (learn, answer a question, spot it on a chart, then make a call) and an unlimited Stochastic practice game graded on your reasoning. No sign-up or money needed.