Stochastic Oscillator emphasizes the equilibrium of buy and sell activities
within the market. It anticipates reversals in trends as it indicates whether
the stock or a currency is either overbought or oversold in the market. A market
indicating an oversold or overbought level is ripe for a reversal. Most of the
time, the condition of the trend remains for an extended period with Stochastic
remaining on the overbought or oversold levels before a reversal occurs especially
when it is based on a longer term time period. On a shorter term basis, prices
are more sensitive to stochastics when it reaches overbought or oversold levels.