By definition, a stochastic is an oscillator that measures conditions of overbought and oversold market. Both lines are similar to the MACD lines.
Stochastic has a scale from 0 to 100.
When the indicator is at a level above 80 on the scale, it means that the market is overbought and when the indicator is below 20, it means that the market is oversold.
As a rule, we buy when the indicator is below 20 and sell when it's over 80.
