Stochastic RSI (StochRSI) is an indicator of an indicator. It calculates the RSI relative to its range in order to increase the sensitivity of the standard RSI. The values of the StochRSI are from zero to one.
The Stochastic RSI can be interpreted several ways. Overbought/oversold conditions are indicated when the StochRSI crosses above .20 / below .80. A buy signal is generated when the StochRSI moves from oversold to above the midpoint (.50). A sell signal is generated when the StochRSI moves from overbought to below the midpoint. Also look for divergence with the price to indicate the end of a trend.
See also Stochastic, Stochastic Oscillator and RSI.
The Stochastic RSI was developed by Tushar S. Chande and Stanley Kroll and is described in their 1994 book, The New Technical Trader.
Copyright © 2016, FM Labs, Inc.