StochRSI (Stochastic RSI)

Stochastic RSI (StochRSI) applies the Stochastic oscillator formula to RSI values instead of price data. Developed by Tushar Chande and Stanley Kroll, it is a more sensitive indicator than standard RSI, oscillating between 0 and 100. It identifies overbought/oversold conditions within the RSI itself.

StochRSI applies the Stochastic formula to RSI:

StochRSI = (RSI - Lowest RSI(N)) / (Highest RSI(N) - Lowest RSI(N)) * 100
%K = SMA(StochRSI, k_period)
%D = SMA(%K, d_period)

This creates a faster oscillator that reaches extreme levels more frequently.

• Above 80 — Overbought zone
• Below 20 — Oversold zone
• 50 — Midpoint, potential support/resistance
• %K/%D crossovers — Signal line crossover triggers

Buy signals

• StochRSI crosses above 20 from below (exiting oversold)
• %K crosses above %D below 20 (bullish crossover in oversold zone)
• StochRSI rebounds from 0 area

Sell signals

• StochRSI crosses below 80 from above (exiting overbought)
• %K crosses below %D above 80 (bearish crossover in overbought zone)
• StochRSI reverses from 100 area

| Parameter | Default | Description | |-----------|---------|-------------| | RSI Period | 14 | Period for the underlying RSI | | Stoch Period | 14 | Lookback for Stochastic calculation | | %K Smoothing | 3 | Smoothing period for %K line | | %D Smoothing | 3 | Smoothing period for %D (signal) line |

| Condition | Meaning | |-----------|---------| | STOCHRSI(14,14,3,3) < 20 | StochRSI oversold | | STOCHRSI(14,14,3,3) > 80 | StochRSI overbought | | STOCHRSI(14,14,3,3) cross_over 20 | Exiting oversold (buy) | | STOCHRSI(14,14,3,3) cross_under 80 | Exiting overbought (sell) |

• StochRSI is more volatile than RSI — expect more frequent signals and whipsaws
• Best for identifying short-term overbought/oversold conditions
• In strong trends, StochRSI can remain at extremes — use trend filters
• The %K/%D crossover within extreme zones gives the highest probability signals
• Reduce false signals by using longer smoothing periods (5-7 for %K and %D)