The Stochastic Oscillator is a momentum indicator that compares a security's closing price to its price range over a given period, helping identify overbought or oversold conditions. For example, if a stock's price closes near its high for the past 14 days, the Stochastic Oscillator will be high, suggesting strong upward momentum. The Stochastic Oscillator consists of two lines: %K (the fast line) and %D (the slow line), which is a moving average of %K. These lines oscillate between 0 and 100. Readings above 80 typically suggest overbought conditions, while readings below 20 indicate oversold conditions. A common trading strategy involves looking for a bearish divergence when the price makes a higher high but the Stochastic Oscillator makes a lower high, signaling potential weakness. Conversely, a bullish divergence occurs when the price makes a lower low but the Stochastic Oscillator makes a higher low, suggesting a potential rebound. For instance, if Bitcoin is trending upwards and the %K line crosses below the %D line while both are above 80, it could signal an impending pullback, prompting a trader to consider taking profits or tightening a stop-loss.