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Smooths the raw stochastic %K with a 3-period average, exposing confirmed momentum shifts by filtering the fastest noise from the oscillator.
Stochastic %D is a 3-period moving average of %K. It smooths the stochastic signal and is often used for crossovers.
Stochastic %D is a 3-period moving average of %K. It smooths the stochastic signal and is often used for crossovers.
The calculation:
%D = 3-period Simple Moving Average of %K
Role of %D:
- Signal line: Provides crossover signals with %K
- Smoothing: Reduces noise in the raw %K signal
- Confirmation: Slower movement confirms %K signals
Trading signals:
- Bullish crossover: %K crosses above %D, especially in oversold zone
- Bearish crossover: %K crosses below %D, especially in overbought zone
- Strongest signals: Crossovers in extreme zones (below 20 or above 80)
Stochastic types:
- Fast stochastic: Raw %K with 3-period %D
- Slow stochastic: Fast %D becomes slow %K; slow %K is smoothed again for slow %D
- Full stochastic: Allows customisation of all parameters
Best practices:
- Wait for crossovers: More reliable than %K alone
- Extreme zone signals: Most significant in overbought/oversold areas
- Trend context: Trade crossovers in direction of larger trend
- Multiple timeframes: Confirm signals across different periods
The %D line adds reliability to stochastic analysis by filtering out some of the noise in the raw %K readings.