What is the 'StochRSI'

An indicator used in technical analysis that ranges between zero and one and is created by applying the Stochastic Oscillator formula to a set of Relative Strength Index (RSI) values rather than standard price data. Using RSI values within the Stochastic formula gives traders an idea of whether the current RSI value is overbought or oversold - a measure that becomes specifically useful when the RSI value is confined between its signal levels of 20 and 80.

BREAKING DOWN 'StochRSI'

The StochRSI is deemed to be oversold when the value drops below 0.20, meaning the RSI value is trading at the lower end of its predefined range, and that the short-term direction of underlying security may be nearing a correction. Conversely, a reading above 0.80 suggests the RSI may be reaching extreme levels and could be used to signal a pullback in the underlying security.

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RELATED FAQS
  1. What are the differences between Relative Strength Index (RSI) & Stochastic Oscillator?

    Learn about some of the main differences between the relative strength index and the stochastic oscillator, two well-known ... Read Answer >>
  2. What are the best indicators to identify overbought and oversold stocks?

    Learn about the interpretation of the relative strength index and stochastics, two of the most popular indicators of overbought ... Read Answer >>
  3. What is a common strategy traders implement when using the Relative Strength Index ...

    Read about some of the many uses of the Relative Strength Index (RSI), and learn about basic strategies traders implement ... Read Answer >>
  4. How are StochRSI patterns interpreted by analysts and traders?

    Learn about the StochRSI oscillator and how analysts and traders interpret this unique momentum indicator when developing ... Read Answer >>
  5. Who uses the relative strength index (RSI)?

    Understand how experts use the relative strength index (RSI) to improve their knowledge of a stock and its history in the ... Read Answer >>
  6. What are the best ways to measure if a stock is oversold?

    Understand two of the most common methods for measuring the oversold status of a stock, the basics of calculation and how ... Read Answer >>
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