Adaptive Stochastic Exhaustion
- Göstergeler
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Angelo Arcamone
I am passionate about trading and financial market analysis. Over time, I have developed a strong interest in technical analysis, trading strategies, and price behavior across different timeframes. - Sürüm: 1.0
- Etkinleştirmeler: 5
Adaptive Stochastic Exhaustion is not a normal Stochastic indicator. It does not say “buy” or “sell”. It is designed to help you understand whether an extreme Stochastic zone is still strong or whether it is starting to lose strength.
The blue line is the smoothed Stochastic. When it is above 80, the market is in a high / overbought zone. When it is below 20, the market is in a low / oversold zone.
The grey line is the signal line, which is a moving average of the blue line. It helps you see whether the Stochastic movement is turning or losing strength.
The 80 and 20 lines are the extreme zones. If UseAdaptiveLevels = false , they stay fixed at 80 and 20. If you set UseAdaptiveLevels = true , the levels adapt to the recent distribution of the Stochastic.
The histogram is the most important part: it is the Exhaustion Score, from 0 to 100.
When the Stochastic moves above 80 or below 20, the indicator does not immediately assume a reversal. First, it checks:
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how many candles it has remained in the extreme zone
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whether the Stochastic momentum is slowing down
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whether price is still really pushing or only making weak new highs/lows
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whether there is a possible divergence
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whether volatility is compressing
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whether the Stochastic is exiting the extreme zone
Practical interpretation:
Low score
The extreme zone is present, but there is no clear exhaustion yet. The trend may continue.
Medium score
Extreme pressure is still active, but the first signs of slowdown are appearing.
High score
The extreme zone is showing more exhaustion conditions. It is not an automatic signal, but it tells you: “be careful, the move may be losing quality here.”
Colors:
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Grey: neutral
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Tomato / red: overbought pressure still active
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Orange: possible overbought exhaustion
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Light blue: oversold pressure still active
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Green: possible oversold exhaustion
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Yellow: exit from the extreme zone detected
The top label summarizes the current state:
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Neutral
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Overbought pressure active
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Overbought exhaustion building
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Oversold pressure active
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Oversold exhaustion building
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Extreme exit detected
In simple words:
do not look only at “above 80” or “below 20”. Watch whether the score is increasing. If the score remains low, the Stochastic is extreme but the move may still be healthy. If the score rises, the market is showing signs of exhaustion.
