A two-line indicator used to determine momentum in stock trends. As an oscillator, it fluctuates above and below zero, providing trade signals and analytical insight based on divergence with price and KST and signal Line crossovers.
The indicator formula uses four different time frames to show overall momentum (rather than momentum over only one specific timeframe):
- ROCMA1 = 10-Period SMA of 10-Period Rate-of-Change
- ROCMA2 = 10-Period SMA of 15-Period Rate-of-Change
- ROCMA3 = 10-Period SMA of 20-Period Rate-of-Change
- ROCMA4 = 15-Period SMA of 30-Period Rate-of-Change
- KST Line = (RoCMA1 x 1) + (RoCMA2 x 2) + (RoCMA3 x 3) + (RoCMA4 x 4)
- Signal Line = 9-period SMA of KST, where SMA stands for Simple Moving Average and ROC stands for Rate of Change.
While the formulas are different, the application of KST are similar to those of the MACD.