The Stochastic method has a %K line and a %D line.
The formula for the %K is:
%K = 100[(C-Ln)/(Hn-Ln)]
In this equation C is today’s close, Ln the lowest low for the last n days, and Hn is the highest figh over the same n day trading period.
The formula for the %D is:
%D = 100(H3/L3)
In this expression, H3 is the 3-period sum of (C-Ln) in the %K calculation, and L3 is the 3-period sum of (Hn-Ln). %D is also calculated as 3 period moving average of %K.
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