Blau Stochastic Index: Smoothed Range-Normalized Price Momentum

Summary

This indicator reference explains the Blau Stochastic Index oscillator, which measures a close relative to the recent high-low range and centers the result around zero. It defines the price difference as the close minus the lowest price over the selected period, and the range as the corresponding high minus low. The raw difference and range are each smoothed through three successive moving-average stages, using configurable first, second, and signal periods and a selected averaging method.

The document gives formulas for both the oscillator and its signal line, but does not describe entry or exit rules, parameter selection, or empirical performance. It is therefore a calculation specification rather than a tested trading strategy. Interpretation and practical use require additional validation, including deciding how the oscillator behaves in flat ranges and whether chosen smoothing settings suit the intended market and time frame.

Key ideas

• The oscillator compares the closing price with the recent period's high-low range and centers the result around zero.
• The price difference and range are smoothed separately through three stages.
• The indicator has configurable lookback, smoothing, signal, and averaging-method inputs.
• The signal line uses the smoothed price difference and range in the same normalized form.
• The document provides formulas but no trading rules or performance evidence.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.