What is Stoch RSI?
Stochastic RSI first calculates an RSI, then measures where the latest RSI value sits between the highest and lowest RSI of the recent window. 100 means RSI is at the top of its own recent range and 0 means it is at the bottom. Because it measures RSI against itself, it reaches 0 and 100 far more often than RSI reaches 70 or 30. Altrady Charts plots %K and %D in their own pane with dashed levels at 80 and 20.
Stoch RSI shows where RSI is relative to its own recent values. It says nothing directly about price levels or trend direction, and a reading of 0 or 100 is common rather than exceptional.
How to use Stoch RSI
- Above 80 or below 20. Above 80 means RSI is near the top of its recent range, below 20 near the bottom. In a trend the lines can sit at an extreme for many bars.
- %K crossing %D. %K is the faster line. Its crosses with %D show RSI turning within its range, and they are frequent.
- Very fast reactions. Because it is an oscillator of an oscillator, it turns earlier than RSI and produces many more swings, which makes it noisier.
- Two separate lengths. RSI Length controls the RSI itself; Stochastic Length controls the window RSI is compared against. They are independent.
These are ways to read the lines, not entry signals on their own.
Settings
| Setting | Default | What it changes |
|---|---|---|
| K | 3 | Bars in the simple average that smooths the raw reading into %K. Higher makes %K calmer. Minimum 1. |
| D | 3 | Bars in the simple average of %K that forms %D. Higher makes %D slower and crossings rarer. Minimum 1. |
| RSI Length | 14 | Bars in the underlying RSI. Lower makes the RSI, and so the whole indicator, more jumpy. Minimum 1. |
| Stochastic Length | 14 | How many RSI values form the range the latest RSI is measured against. Lower reaches 0 and 100 more often. Minimum 1. |
| Source | Close | Which price the RSI is calculated on. Open, high, low, hl2 and hlc3 are also available. |
Adjust the four lengths and the price source in the indicator settings. The 80 and 20 levels are fixed.
Calculation
The Stochastic formula is applied to RSI values instead of to the high, low and close:
r = RSI(close, 14)
raw = 100 * (r - lowest r of 14) / (highest r of 14 - lowest r of 14)
%K = SMA(raw, 3)
%D = SMA(%K, 3)The RSI uses Wilder's smoothing and needs 15 bars for its first value. The range then needs 14 RSI values, and each 3-bar average adds two more bars, so with the defaults %K first appears on the 30th bar of loaded history and %D on the 32nd.
If RSI is exactly the same across the whole window, the range is zero and there is no value for that bar.
Limitations
- Extremes are routine. Readings of 0 and 100 happen often, so on their own they say little about whether a move is exhausted.
- It is noisy. An oscillator of an oscillator reacts to small changes, producing many crossings that lead nowhere in sideways markets.
- It is removed from price. The reading reflects RSI's position in its own range, which can change sharply even when price moves very little.
- The live candle moves. The current bar's values change until that bar closes.
- It depends on timeframe and lengths. The four lengths interact, and the same market reads differently on 15m and 1D.
Frequently asked questions
Stochastic RSI applies the Stochastic formula to RSI rather than to price. It shows where the current RSI sits between the highest and lowest RSI of a recent window, on a 0 to 100 scale, with a smoothed %K line and its average, %D.
Above 80 means RSI is near the top of its recent range, below 20 near the bottom, and %K crossing %D shows RSI turning. Because these happen often, many traders only act on them in the direction of a trend they have judged separately.
RSI measures the balance of recent gains and losses in price. Stochastic RSI measures where RSI sits relative to its own recent values. It is faster and reaches its extremes much more often, at the cost of more noise.
Yes. The indicator declares five inputs: K, default 3; D, default 3; RSI Length, default 14; Stochastic Length, default 14, each with a minimum of 1; and Source, default close. Open the indicator's settings on the chart to change them.
Values on bars that have already closed are not revised. The current candle's values move while it is still live and settle when it closes. The underlying RSI uses Wilder's average, which carries earlier bars forward, so loading older history recalculates it and values near the start of the loaded range can shift.
Use the Add to chart button at the top of this page. It opens BTC/USDT on Binance in the Altrady Charts terminal with the built-in Stochastic RSI already applied. On any other market, open the indicator picker on the chart and choose Stochastic RSI from the Oscillator group.