Stochastic oscillator
An indicator showing where the closing price sits inside the range between the high and the low of a chosen period.
Formula
\%K = \frac{P_{close} - L_n}{H_n - L_n}H and L are the high and the low over n intervals; the indicator's second line is a smoothed version of the first.
How to read the number
It answers one narrow question: did the interval close nearer the top or nearer the bottom of the recent range.
When the metric lies
In a strong move the reading jams against the edge of the scale and stays there. For that whole stretch it stops distinguishing between states of the market.
Also known as: stochastics