Double Smoothed Stochastics (W. Blau):

The indicator allows to display the Double Smoothed Stochastics – see Stocks & Commodities, January 1991. The Double Smoothed Stochastics as introduced by William Blau should not be confused with the better known Double Smoothed Stochastics (DSS) indicator by Walter Bressert.

Indicator Description

Like a standard Stochastic Oscillator, Blau’s Double Smoothed Stochastic’s plot on a range from 0 to 100 and the same rules of interpretation can be applied. Generally, plots above the 70 threshold indicates an overbought scenario, whereas values below 30 indicate oversold. If the plot has been moving below the 30 level and crosses the signal line, it can be interpreted as a buy signal. Conversely, if the oscillator has been above the 70 level and crosses below the signal line, it can be taken as a sell signal.

Blau Double Smoothed Stochastics (DSS-B):

The raw Stochastics is calculated as the percentage value for the close within the range created from the highest high and the lowest low over the lookback period. The DSS-B is obtained by separately double-smoothing both numerator and denominator of the raw Stochastics. The double-smoothed value for the numerator is then divided by the double-smoothed value for the denominator.

Stochastics Smoothing: William Blau twice applied an EMA to both numerator and denominator of the raw Stochastics. This indicator allows to use 30 different moving averages for the smoothing. The same moving average type is used for the first and the second average calculation.

Parameters: The lookback period for the raw Stochastics indicates the number of bars for which the highest high and lowest low is determined. The lookback period is comparable to all other Stochastics indicators. The default value is 14 bars. The double smoothing of numerator and denominator is done with two moving averages. The first smoothing is typically done with a faster moving average, the second with a slower moving average.

Signal line: William Blau did not use a signal line for the double smoothed indicators. We have added one as the cross of the signal line can be used for trend indication. The moving average type and the period for the signal line can also be selected.

The indicator is available for NinjaTrader 8.