FOREX STOCHASTIC
The Stochastic oscillator displays two lines with two methods of signalling buying and selling opportunities as well as displaying divergence.
When the Stochastic rises above 80 a sell signal is triggered and when it drops below 20 a buy signal is triggered.
When the Stochastic crosses above the red signal line a buy is triggered and when it crosses below the signal a sell is triggered.
Divergence occurs when the price is making higher peaks and the stochastic is making lower highs. Divergence also occurs when the price is making lower lows and the stochastic is making higher lows. In both instances the price is expecting to follow the stochastic.