HEre is the problem with Stochastics: as stated earlier in the thread they are only accurate in a sideways market, where the market is bouncing back and forth in a range.. If a strong up/down trend exists, they will read overbought/oversold continoulsy and give bad signals... But that is the million $$ question. When is the trend going to break out of a trading range?? If you can assume it is a low-volume day without much major activity causing breakouts (like last friday, much of wall street was already on vacation) , use the stoch's to ride this trading range back and forth throughout the day..
I too disagree. The stochastics can be used as a trend indicator and that is exactly when it stays above 80 for a longer period of time. Plus, a good reliable reversal in a strong trend is signalled by a stochastics divergence rather than some sort of stochastics crossing. Stochastics crossings can be used only when trading in a more or less flat range (BBs pretty much horizontal or slightly trending up or down). These are quite elementary observations and yet people tend to use stochastics as if it could be applied in all possible conditions without any other filters. While this is true, the keyword is 'filters'.
Good points. A system cannot be based on just one indicator and even less so on its wrong interpretation.