Stochastic is a crossover oscillator indicator created by Dr.George Lane. Since stochastic is a crossover oscillator indicator, it, therefore, ranges between 0 to 100 with two crossover lines, the blue line which is the stochastic line and the red line which is the signal line. Therefore, since stochastic is a crossover oscillator indicator, it is therefore used by cryptocurrency traders to know whether the market is in overbought or oversold condition when the two line crosses over.Therefore, the sell or buy signal will take place when there is a crossover at below 20 or at above 80.

                                     Oversold Market Crossover

For oversold market, the stochastic oscillator will cross above the signal line at below 20. This will signal the cryptocurrency trader to buy a certain number of a given cryptocurrency and hold them until their price has risen above what they will have previously purchased with.This is indicated as from the candlesticks chart below;

The chart above represents the market for XRP against USDT.
From the candlesticks chart above, there are 3 points. Point A which is blue in color is the stochastic line while point B which is red line is the signal line. Point C is the crossover point. At point C, the stochastic oscillator has crossed above the signal line at below 20 thus an indication of an oversold market. This will signal the cryptocurrency trader  to make a buy order of a certain number of XRP and hold them until the price rises in order to increase the value of their account. The cryptocurrency trader can decide to make a buy order using the limit price or the market price.When the order is being executed, the account of the cryptocurrency trader will start increasing in value in terms of USDT.



              Overbought cryptocurrency market crossover

For overbought market, the stochastic oscillator will cross below the signal line at above 80. This will signal the cryptocurrency trader to sell a certain number of a given holding cryptocurrency which he/she had previously purchased in order to avoid his trading account from declining in value  .This is indicated from the candlesticks chart below;
The candlesticks chart above represents the market for XRP against USDT.
From the candle sticks chart above, there are 3 points. Point A which is blue in color is the stochastic line while point B which is red line is the signal line. Point C is the crossover point. At point C, the stochastic oscillator has crossed below the signal line at above 80 thus an indication of an overbought market. This will signal the cryptocurrency trader to make a sell order of a certain number of XRP which he had purchased at lower price and was holding. The trader can decide to make a sell order using the limit price or the market price.When the order is being executed, the account of the trader will now have increased in terms of USDT.

Recommendation: Cryptocurrency market is highly volatile. When you place a buy order, make sure to apply risk management to be safer incase your buy order goes against you.     If you feel am doing great work, you are always free to make your donation: Here are our donation details;
 
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