What the Indicator Shows
Stochastics consists of two lines, %K and %D, both of which move within a range of 0% to 100%. A higher reading indicates the price is trading near the upper end of its recent range, while a lower reading indicates it is trading near the lower end.
How to Read It, and What to Watch Out For
Readings above about 80% are sometimes treated as a guideline for "overbought" conditions and readings below about 20% for "oversold" conditions, but as with RSI, reaching these levels does not guarantee that a reversal will follow. During a sustained strong trend, the indicator can remain at these levels for an extended period, so it should not be relied on alone and is commonly checked alongside other indicators.