The Trigger Line (%D) is a smoothed version of %K. A 3-day simple moving average of %K is usually plotted alongside to act as a trigger line, called %D. Generally speaking, readings above 80 are considered overbought and readings below 20 are considered oversold. A more accurate and reliable signal occurs when the STC moves from oversold area back above 20 and from overbought area back below 80. Buy and sell signals can also be observed when %K crosses above or below %D. However, such crossover signals may be too frequent and can result in a lot of whipsaws. Thus, it is suggested to use the convergence/divergence (like the application in MACD) to further confirm the reverse of direction.

In our Java Charting System, the parameters of n and unit period for calculating the moving average of %K are defaulted as 14 days and 3 days respectively. You can also do your favorite adjustment in the appropriate boxes as shown below.