The DSS (Double Smoothed Stochastic) indicator applies Exponential Moving Averages (EMAs) of two different periods to a standard Stochastic %K. The components that construct the Stochastic Oscillator are first smoothed with the two EMAs. Then, the smoothed components are plugged into the standard Stochastic formula to calculate the indicator.
How to trade the indicator:
DSS ranges from 0 to 100, like the standard Stochastic Oscillator. The same rules of interpretation apply to Stochastics can be applied to DSS, although DSS offers a much smoother curve than the raw Stochastic.
Generally, the area above 70 indicates an overbought zone, while the area below 30 is considered an oversold zone. A sell signal is given when the oscillator is above the 70 level and then crosses back below 70. Conversely, a buy signal is given when the oscillator is below 30 and then crossed back above 30. 70 and 30 are the most common levels used but can be adjusted as needed.
This is a MetaTrader 5 (MT5) indicator and works with all currency pairs and all timeframes. Once you download and install the indicator, it will appear in your trading chart, like the image shown above.
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