The premier stochastic oscillator (PSO) is a technical indicator based on the stochastic oscillator.
The PSO differs in that it is normalized to register neutral values at zero, resulting in greater sensitivity to recent, short-term price moves.

Additionally, the PSO is calculated using a double exponential moving average that creates a smoother and more even response to market changes.

History of the PSO
The PSO was first introduced by technical analyst Lee Leibfarth in the August 2008 issue of the journal Technical Analysis of Stocks & Commodities. Stochastic oscillators have long been used to help traders and investors identify areas where trend changes are likely. Leibfarth developed the PSO to take advantage of a standard stochastic oscillator's strengths while enhancing it to become more reactive to market activity. The result is a faster indicator that provides earlier signals for potential trend changes.

Calculating the PSO
Before looking into the calculations of the PSO, it is helpful to understand the logic behind a standard stochastic oscillator. The classic stochastic oscillator measures price momentum by comparing a trading instrument's current price to a price range specified in a lookback period (the number of periods from which price data are collected). For example, if the range is between $60 and $70 and the current price is $67.50, then the price is at 75% of the range.

The goal of a stochastic oscillator is to figure out where price has been and anticipate where price is headed. This is achieved by determining if price bars are closing close to their highs or lows. When prices are closing nearer to bar highs, it is indicative of an uptrending market. Conversely, when prices are closing nearer to bar lows, it signifies a downtrending market. The basic calculation for the main value of a standard stochastic oscillator (%K) is:

The premier stochastic oscillator normalizes the standard stochastic oscillator by applying a five-period double exponential smoothing average of the %K value, resulting in a symmetric scale of 1 to -1. The PSO calculation, then, is:

Hello, i found something that could be interesting and it would be nice if you could make an arrow to it. I saw that sometimes the line is blue in oversold or overbought and that situation is very accurate to reverse. Could you make an arrow when this stochastic is in os or ob zone and the line is blue?