Observe the interaction between the fast and slow lines. When the fast signal line(blue line) rises above and crosses the slow MACD line(red line), it means buyers are starting to dominate and a trader might consider buying that particular stock. When the fast line falls below and crosses the slow MACD line, it means sellers are starting to dominate and a trader might consider selling that particular stock.
Look at the instances where the %K line crosses and rises above the %D line. This indicates point when you should buy the stock. And if you look at the instances where the %K line dips under the %D line, then this is a signal to sell.
What is the rationale for this method of stochastic interpretation? The %K line is above the %D line when the price is on the rise, and it lies below the %D line when the price is falling. And because stock traders aim to buy low and sell high, these crossings signal the appropriate time to buy or sell.
For another way to interpret the stochastic oscillations, observe when the %K and %D lines rise above .8 = 80% and dip below .2 = 20%.
When the %K and %D lines rise above 80%, many stock analysts recommend selling as soon as the lines dip back down below 80%. And when the %K and %D lines dip below 20%, analysts advise stock traders to buy once the lines rise above 20%.