Technical analysis · updated October 21, 2026
What is the stochastic oscillator and how is it calculated
The stochastic oscillator shows where today's price closes relative to the lowest and highest prices of the last 14 days, on a scale from 0 to 100. Near 100, the price is close to its recent high; near 0, it is close to its recent low.
The stochastic oscillator formula
%D = 3-day average of %K
- 14-day low and high
- The lowest and highest prices over the last 14 trading days.
- %K
- The fast line, multiplied by 100 so it falls between 0 and 100.
- %D
- The slow line: the average of %K over the last 3 days, used as the signal.
Worked example
Over the last 14 days the stock traded between $80 and $100. Today it closes at $96.
The price is 80% of the way from the recent low to the recent high: right at the edge of the "overbought" zone.
How to read the stochastic oscillator
Many investors watch for %K crossing above %D (a signal to the upside) or below it (a signal to the downside), especially below 20 and above 80.
When the stochastic oscillator can fool you
Strong trends: in a long rise, the stochastic can stay above 80 for weeks without the price turning. Very sensitive: it changes fast and gives many false signals in a market with no direction.
Related terms
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Questions about the stochastic oscillator
Stochastic or RSI?
They show similar things. RSI compares the size of gains with the size of losses, the stochastic compares today's price with the recent range. Many people use both.
What does it mean when %K crosses %D?
That the price's pace is changing. %K above %D suggests the price is picking up speed to the upside, %K below %D that it is slowing down.
These explanations are for information only. They are not a recommendation to buy or sell.
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