Stoch kd cross down event
Marks each bar where the stochastic %K drops below its smoothed %D line, a short-term bearish turn.
%K is where the close sits inside the high-low range of the last k_window bars, from 0 at the range low to 1 at the range high. %D is the simple average of the last d_window %K values, so it moves more slowly. The marker fires on the one bar where %K falls from at or above %D to below it, with no check on whether the stochastic is overbought or oversold.
How to read it
- Markers are drawn on the candles at the bar of the cross, not in a pane below the price.
- A marker means %K just dropped under %D. It says momentum turned down, not that price will fall.
- The lines are not drawn here. To see %K and %D, add the basic Stochastic KD indicator.
- Expect many markers at default settings, so judge a cluster of them rather than a single one.
What it outputs
- Bearish cross
- Drawn on the bar where %K moves below %D after being at or above it on the bar before. Markers never sit on consecutive bars, because %K must first move back up through %D.
When it fires
On the bar where %K drops from at or above %D to below it, meaning the close has slipped within its recent range faster than %D's average. It does not confirm a fall in price, and it can fire in the middle of the range.
Settings
- k_window
- How many bars the high-low range looks back over. Raising it widens the range, so %K moves more slowly and reaches 0 or 1 less often. Lowering it toward 5 makes %K swing across its full range on small moves.
- d_window
- How many %K values %D averages. Raising it smooths %D and makes it lag %K more, so %K crosses it less often. At 1, %D equals %K and the marker never fires.
Pitfalls
- No zone filter: a cross counts anywhere from 0 to 1, including from the bottom of the range. Require %K above 0.8 yourself for the classic overbought sell.
- Frequent at defaults: on one month of SPY one-minute bars it fired on about 1 bar in 5, roughly 188 times a day. Judge clusters, or try the slower presets.
- It lags price: %K and %D are built from the same recent closes, so a cross confirms a move already under way rather than predicting one.