Stochastic Indicator
If we merge last 5 candles and make one. Highest high of last sessions is High of this merged candle, Lowest Low is a Low price of this candle and recent closing price is a close of this merged candle. Let’s calculate range of this candle. Range = High – Low For example, High of this merged candle is 100 and Low is 80. So, the range is 40. Range of this candle shows, the price range of last five sessions. What if we calculate Close - Low of this merged candle, what will it show? It would capture how far the closing price is from the lowest price of last five sessions – right? Let us call it CL. In above example, closing price is 100 and Low is 80 so CL is 20. If the value of CL is a big number, it is a bullish sign, indicating price is closing way higher from the low. Similarly, if CL is a small number, it is bearish. See the image. But how do we know whether it is high or low just from the absolute number? We can get to know that if we divide this by rang...