Stochastic RSI
Where RSI sits within its own recent range, so it swings faster and further than RSI.
5 minLesson 8 of 102 questions at the end
Key ideas
- 1Stochastic RSI takes RSI and asks where it sits between its lowest and highest of the last 14 candles, from 0 to 100.
- 2Its %K line is smoothed over 3 candles, and %D is a 3-candle average of %K.
- 3It is much quicker than RSI: it reaches the extremes often, which makes each extreme mean less.
- 4Above 80 and below 20 are the usual marks, and like RSI they show momentum, not a turning point.
How it works
Formula
StochRSI = (RSI − lowest RSI) ÷ (highest RSI − lowest RSI), over 14 candles
Then %K is smoothed over 3 candles, and %D is a 3-candle average of %K.
It asks where RSI sits within its own recent range. That stretches small changes in RSI into big swings, so it reacts faster and reaches its extremes much more often.
Stochastic RSI with RSI
Made-up candles. Both live on 0 to 100; see how much more often Stochastic RSI touches the ends.
Made-up 1h candlesWorked out like Lance Trade’s chart
O 86,843H 87,700L 86,823C 87,501Stoch %K 95.3Stoch %D 95.3RSI 66.1
RSI length14
Stochastic length14
%K smoothing3
%D smoothing3
Reading it
- Above 80 and below 20 are the usual marks.
- %K crossing %D shows short-term momentum changing.
- Because it moves so much, each extreme on its own means little. Read it with the trend.
What it can’t do
Common mistakes
- Reacting to every touch of 0 or 100. Stochastic RSI hits them all the time.
- Using it without a view of the larger trend.
Check yourself
Question 1 of 2
Why does Stochastic RSI swing between extremes more than RSI?
Keys 1 to 3 pick an answer, Enter checks it
Try it in Lance
Add RSI and Stochastic RSI together and see how much more often the second one reaches its extremes.
Compare with RSI