☕KDJ
#kdj #kdjindicator
This is the KDJ version with the same formula as KDJ installed on Binance It use SMMA instead of SMA like STO.
tradingview chart: https://www.tradingview.com/script/ChWKJrrr/
The KDJ indicator is a technical analysis tool and momentum oscillator, an extension of the STO (Stochastic Oscillator), that uses three lines (%K, %D, and %J) to identify overbought/oversold conditions, market trends, and potential trend reversals. Derived from a security's closing price relative to its recent high-low range, the KDJ helps traders find short-term trading opportunities by providing buy/sell signals based on line crossovers and by signaling extreme market conditions when lines reach 0 or 100.
How to calculator KDJ indicator:
Parameters: KDJ(RSV Period, K Period, D Period)
Example: KDJ(9,3,3) calculation for Day chart
RSV = (Current closing price - 9-day minimum value)/(9-day high price - 9-day minimum value) ×100
K = SMMA (RSV, 3)
D = SMMA (K, 3)
J = 3K - 2D
How to Use the KDJ Indicator
Crossovers:
Buy Signal: When the %K line crosses above the %D line.
Sell Signal: When the %K line crosses below the %D line.
Overbought/Oversold Conditions:
Overbought: When the %J line goes above 100.
Oversold: When the %J line goes below 0.
When the %K and %D lines are above 80, the market is considered overbought.
When the %K and %D lines are below 20, the market is considered oversold.
Key Features and Limitations
Momentum and Reversals:The KDJ is a momentum indicator that measures the intensity of price changes and is used to spot overbought and oversold signals, indicating potential trend reversals.
Short-Term Focus:It is highly sensitive to short-term price movements, making it a favorite for short-term traders.
Volatility:In highly volatile or volatile markets, the KDJ can generate false signals due to its high sensitivity, potentially leading to incorrect trades.
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