☕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.

• Combined Use:Traders often use the KDJ in conjunction with other indicators, like the RSI or MACD, to confirm signals and reduce the chance of false trading signals.