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Stochastic RSI (StochRSI)

Tushar Chande, a trading system wizard, and money management specialist Stanley Kroll created th...

Stochastic RSI (StochRSI)

Stochastic RSI (StochRSI)

Tushar Chande, a trading system wizard, and money management specialist Stanley Kroll created the StochRSI in their 1994 book, "The New Technical Trader."

The goal was to boost sensitivity in order to generate overbought and oversold signals.

StochRSI, according to technical traders, oscillates between 20 and 80 for an extended length of time without reaching an extreme range.

Unlike classic momentum indicators, which utilise 70 and 30 as turning points, the StochRSI employs 20 and 80 as price overbought and oversold levels, respectively.

If traders are attempting to enter a trade based on an RSI oversold or overbought reading, they may find themselves constantly on the sidelines. Most traders now see the StochRSI as a critical momentum oscillator that must be used.

What exactly is the stochastic RSI (StochRSI)?

The stochastic RSI (StochRSI) is a technical indicator that measures the strength and weakness of the relative strength index (RSI) across time.

The values of StochRSI are derived from the RSI. Essentially, a stochastic oscillator is applied to a series of RSI values; hence, it is price-based.

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To forecast price turning points, the stochastic method compares the stock's closing price to its price range. Traders can use the algorithm to determine if the RSI readings are overbought or oversold.

Because it employs both momentum indicators, the StochRSI oscillator is a more sensitive indicator that is tailored to a specific historical performance.

How to calculate the stochastic RSI

The StochRSI is calculated using RSI values. The RSI has an input value, commonly 14, that indicates how many data periods are used in its calculation. The StochRSI algorithm then employs these RSI levels.

  • RSI values should be recorded for 14 periods.
  • Take note of the current RSI reading, the greatest RSI reading, and the lowest RSI reading in the 14th period. All of the formula variables for StochRSI may now be filled in.
  • Note the current RSI reading, maximum RSI reading, and lowest reading for the 15th period, but only for the previous 14 periods (not the last 15). Determine the new StochRSI.
  • As each period finishes, compute the new StochRSI value using just the previous 14 RSI data.
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How does StochRSI work?

The StochRSI indicator is most useful around the upper and lower limits of its range. As a result, the indicator's major application is to detect probable entry and departure positions, as well as price reversals.

A number of 0.2 or less indicates that an asset is most likely oversold, while a rating of 0.8 or above indicates that it is most likely overbought.

Furthermore, readings closer to the centerline might give significant information about market patterns.

For example, if the centerline works as a support and the StochRSI lines continue to rise above 0.5, it may indicate the continuance of a bullish or rising trend, especially if the lines begin to move near 0.8.

Readings regularly below 0.5 and heading toward 0.2, on the other hand, suggest a negative or bearish trend.


The Stochastic RSI may be a highly valuable indicator for analysts, traders, and investors - for both short-term and long-term study - because of its increased speed and sensitivity to market changes.

However, more signals equal greater danger, thus the StochRSI should be used in conjunction with other technical analysis tools that can assist in corroborating the signals it generates.

It is also vital to remember that cryptocurrency markets are more volatile than traditional ones, which may result in an increased amount of false signals.

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