StochRSI

AAA

DEFINITION of '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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Indicator

    Indicators are statistics used to measure current conditions ...
  2. Overbought

    1. A situation in which the demand for a certain asset unjustifiably ...
  3. Oversold

    1. A condition in which the price of an underlying asset has ...
  4. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  5. Relative Strength Index - RSI

    A technical momentum indicator that compares the magnitude of ...
  6. Stochastic Oscillator

    A technical momentum indicator that compares a security's closing ...
RELATED FAQS
  1. How effective is creating trade entries after spotting a StochRSI pattern?

    Common momentum oscillators typically signal overbought conditions with readings over 80 and oversold conditions with readings ... Read Full Answer >>
  2. How do I implement a forex strategy when spotting a StochRSI pattern?

    The StochRSI indicator is used in forex trading as it is in stock or options trading. Though it is often used to identify ... Read Full Answer >>
  3. How do I build a profitable strategy when spotting a StochRSI pattern?

    The most common use of the stochRSI in the creation of trade strategy is to look for readings in the overbought and oversold ... Read Full Answer >>
  4. How are StochRSI patterns interpreted by analysts and traders?

    While both the relative strength index (RSI) and the stochastic oscillator measure momentum, they do so by analyzing different ... Read Full Answer >>
  5. What is the difference between fast and slow stochastics in technical analysis?

    The main difference between fast and slow stochastics is summed up in one word: sensitivity. The fast stochastic is more ... Read Full Answer >>
  6. Would a slow stochastic be effective in day trading?

    Given the hundreds of indicators that are available to traders, finding the appropriate technical tools to use in day trading ... Read Full Answer >>
  7. What technical tools can I use to measure momentum?

    One of the main goals of every trader using technical analysis is to measure the strength of an asset's momentum and the ... Read Full Answer >>
Related Articles
  1. Trading Strategies

    Momentum And The Relative Strength Index

    These two indicators can give the trader a better understanding of when to get in and out of an issue.
  2. Fundamental Analysis

    What is Quantitative Analysis?

    Quantitative analysis refers to the use of mathematical computations to analyze markets and investments.
  3. Chart Advisor

    Invest in Japan with this ETF

    The Japanese stock market has been front and center in the minds of many international traders over the past few weeks — and for good reason.
  4. Charts & Patterns

    How to Analyze Pharma Stock Fundamentals

    What you need to know about analyzing the fundamentals of pharma stocks.
  5. Chart Advisor

    Bullish Traders Are Turning To Rare Earth Metals

    Companies that explore and or process rare metals are of specific interest to traders because of strong moves in a couple of the sector’s key players.
  6. Chart Advisor

    Long and Short Trades to Consider This Week

    Here are short and long trades to consider, so you have choices no matter which way the market goes.
  7. Trading Strategies

    How To Best Analyze Relative Strength

    Relative strength indicators measure performance between similar instruments, uncovering opportunities that can translate into reliable profits.
  8. Technical Indicators

    A Guide To Finding The Most Actively Traded Stocks

    Knowing the trading volume of a stock helps traders understand price movements and forecast future movements. This short guide helps investors locate actively traded data.
  9. Charts & Patterns

    Why These May Be the Top 4 Growth Stocks of 2015

    These four stocks have high upside potential in 2015.
  10. Chart Advisor

    Interested in Growth Stocks? See These 4 ETFs

    Given the rise in popularity of growth ETFs, there are several interesting growth stock choices for investors.

You May Also Like

Hot Definitions
  1. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  2. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  3. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  4. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  5. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
Trading Center