The King of Short-term Indicators KDJ

A single line can let you escape the top in advance.

A line can help you buy the dip and get in.

➥What is KDJ?

The KDJ indicator, also known as the stochastic indicator, is one of the widely used indicators. It is a rather novel and practical technical analysis indicator, mainly used for short-term trend analysis, and has obvious advantages at market turning points.

➥Three lines

Fast Line ( K-Line ): reacts quickly, the coin price rises and falls slightly, it moves first.

Slow line ( D line ): the slowest fluctuations, filtering noise, more stable signals.

Directional Line ( J Line ): Maximum volatility, capable of providing early warning for trend reversals.

➥Core Usage:

1. Overbought and Oversold Zones

a. Above 80: Overbought zone, has increased significantly in the short-term, consider reducing positions.

b. 20~80: Hovering zone, mainly observing, let the bullets fly for a while longer.

c. Below 20: Oversold zone, short-term has dropped too much, can pay attention to buying points.

2. Top and Bottom Divergence

a. Divergence: Price reaches a new high, KDJ does not reach a new high but shows divergence → consider selling

b. Bullish divergence: The price hits a new low, but the KDJ does not hit a new low, indicating a bullish divergence → consider buying.

3. Buy on golden cross, sell on death cross.

a. Golden Cross Buy: A golden cross indicates a strengthening short-term trend → consider buying
A position below 20 is more reliable, especially when combined with an increase in trading volume.

b. Death Cross Sell: A death cross indicates a weakening of the short-term trend → consider selling.
Positions above 80 are more dangerous, and breaching the 50 midline requires caution.

➥4 Key Factors to Enhance Effectiveness

a. Best results in a volatile market

b. The win rate is higher when used in conjunction with MACD.

c. The KDJ at the weekly level is more stable

d. Avoid using blindly in a one-sided market