This script is a very simple stochastic calculation similar to Stochastic RSI that calculates a stochastic value of a moving average of the percentage price change. The purpose of the indicator is to find positive and negative volatility momentum peaks which might be able to help identify changes in trends. Like other stochastic indicators, it may be best used in combination with other indicators.
Explained: - First gets the % change for the candle from open to close. Green candles produce positive values, red candles produce negative values. - Then it creates a moving average of that number to try and reduce impacts of very large moves, although this can be changed with the super-fast smoothed length setting. Set it to 1 to remove all smoothing. - After that, it creates a K value using a stochastic calculation based on the range of the price change moving average we created in the previous step. Set the smoothK to one to use a fast stochastic calculation, it is a slow stochastic calculation by default (3-period SMA of stochastic) - Finally, to create the D value it calculates a 3-period SMA of the K value.
FAQ: - Why is this script useful? - This script can help identify the peaks and valleys of volatility momentum
DISCLAIMER: For educational and entertainment purposes only. Nothing in this content should be interpreted as financial advice or a recommendation to buy or sell any sort of security or investment including all types of crypto. DYOR, TYOB.
hey my man really big fan. i was wondering, is there a way to use the fill function to highlight the specific areas of the chart where the Stoch is overbought and/or oversold? you did something similar in your youtube video titled, "TradingView Pine Script Tutorial 29 - Using Fill Function to Highlight a Chart. Part 2: Conditional" which was awesome and i was wondering if something like that was possible to also do on the Stochastic.
BigBitsIO
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@misterstealyourgirl, Yes absolutely. Pretty much the same bit of code, but replace the RSI value I used in the video with the stochastic value you want to highlight vs those thresholds.
misterstealyourgirl
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@BigBitsIO, brilliant i think i got it to work. thanks dude, you are the bee's knees don't ever let anybody else tell you any differently