Definition. The Stochastic Oscillator expresses the latest daily close as its position within the price range of the trailing 14 days. The fast line %K reads 100 when the close sits at the top of that range and 0 when it sits at the bottom. The signal line %D is a 3-day simple moving average of %K. Guide lines at 20 and 80 delimit the lower and upper fifth of the range, conventionally read as the oversold and overbought zones.

Technical. %K is the close less the lowest low of the last 14 days, divided by the highest high less the lowest low of the same window, times 100. Highs and lows are taken from daily open-high-low-close bars, so the range reflects true intraday extremes rather than closing prices alone; built from closes the oscillator would pin at exactly 0 or 100 whenever the latest close were the extreme of its window. %D is the 3-day simple moving average of %K. Both lines sit on a linear 0-100 axis, with price plotted separately on a logarithmic axis. The shaded bands mark days on which %K is above 80 and has fallen below %D, a bearish crossover in the overbought zone, or below 20 and has risen above %D, the bullish mirror. Band height follows price, so each band reads as a date marker rather than a magnitude.

Interpretation. An elevated %K indicates that closes are settling near the upper end of the recent range, the signature of an intact upward drift; a depressed %K indicates the opposite. Because the oscillator is bounded, a reading above 80 is not in itself a reversal signal: in a sustained trend %K can remain near its extreme for weeks, and the 20 and 80 levels then function as trend-strength markers rather than turning points. Crossings of %K through %D compress the same information into discrete events, identifying the bar at which short-term momentum turns against the prevailing move, and the shaded bands isolate those crossings occurring at the extremes.

Notes. The 14-day lookback and 3-day signal are the conventional parameter set. Relative Strength Index (RSI-14) measures the same 14-day momentum through the ratio of average gains to average losses, and Bollinger Bands locate the close within a volatility-scaled band rather than a fixed-length range.