RSI + Stochastic

The Stochastic and Relative Strength Index (RSI) combined indicator is a powerful technical analysis tool used by traders to identify overbought or oversold conditions in the market, as well as potential trend reversals. Both the Stochastic Oscillator and the RSI are momentum indicators, but they focus on different aspects of price movement.

The Stochastic Oscillator measures the level of the current price relative to its price range over a set period, typically using two lines: %K (the main line) and %D (the signal line). Readings above 80 indicate overbought conditions, while readings below 20 suggest oversold conditions.

The RSI measures the speed and change of price movements, providing values between 0 and 100. Traditionally, an RSI above 70 signals overbought conditions, and below 30 signals oversold conditions.

When combined, these indicators offer a more nuanced view of market conditions. Traders often look for alignment between the two indicators—e.g., if both the Stochastic and RSI show overbought or oversold signals, it strengthens the case for a reversal. This combination helps reduce false signals, enhancing the accuracy of trade decisions, especially in volatile or ranging markets. It is a versatile tool for timing entries and exits more effectively.