The “Reverse Stochastic” provide users the exact price level input needed for the stochastic oscilator to reach a certain value (crossover, oversold, overbought).
We provide two ways of reverse calculation. Current reverse value and forecasted value. Current reverse value is just the simple reverse calculation of stochastic. However, we found due to stochastic oscillator’s calculation (based on high, low and close), the indicator repaints or update value too much. For example, when price moves up, the reverse value also moves up a lot, it’s too reactive to the current price. So we made the reverse stochastic even better by forecasting the value by the open of next bar. This makes the indicator much more stable to the current price and allows you to anticipate the crossing of the stochastic oscillator one step ahead.
“Overbought and Oversold Style” changes the display of the overbought and oversold price of stochastic.
Option “Line Levels” plots horizontal lines of the price when stochastic K reaches overbought and oversold level.
Overbought Oversold Line Levels:
Option “Bands” plots the historical running value of the price when stochastic K reaches overbought and oversold level. The user should tick off log display of the chart when they choose “Bands” option.
Overbought Oversold Bands:
Line Levels” and “Bands” have the same current value just different displays.
“Stoch Cross Smoothing” enables users to smooth out the reverse stochastic . It turns the reverse stoch into a close to moving average smooth filter.
Smoothed Reverse Stoch:
Revers Stochastic Link: