Detailed explanation of KDJ indicator usage

The KDJ indicator is three curves, which are mainly considered from five aspects when applying: the absolute number of the value of KD; the shape of the KD curve; the intersection of the KD indicator; the deviation of the KD indicator; and the value of the J indicator.

First, consider the value of KD. The value range of KD is 0 to 100, and it is divided into several areas: above 80 is the overbought area, below 20 is the oversold area, and the rest is the wandering area.

According to this division, if the KD exceeds 80, you should consider selling, and if it is lower than 20, you should consider buying. It should be noted that the above division is only a preliminary process of applying the KD indicator, it is only a signal, and it is easy to incur losses if you operate in this way.

Second, consider the shape of the KD indicator curve. When the KD indicator forms a head and shoulder shape and multiple tops (bottoms) at a higher or lower position, it is a signal to take action. Note that these patterns must appear at a higher or lower position. The higher or lower the position, the more reliable the conclusion.

Third, consider the crossover of the KD indicator. The relationship between K and D is like the relationship between stock prices and MA. There are also problems of death crossover and gold crossover, but the application of crossover here is very complicated and comes with many other conditions.

Take K crossing D from bottom to top as an example: K crossing D is a golden fork, which is a buy signal. But whether a golden fork should be bought depends on other conditions.

The first condition is that the position of the golden fork should be relatively low, in the oversold area, the lower the better.

The second condition is the number of intersections with D. Sometimes at a low level, K and D cross back and forth several times. The number of crosses is the minimum of 2, the more the better.

The third condition is the position of the intersection point relative to the low point of the KD line, which is often referred to as the "right-hand intersection" principle. K intersects D when it is already looking up, which is much more reliable than when D is still falling.

Fourth, consider the deviation from the KD indicator. When KD is at a high or low level, if there is a deviation from the direction of the stock price,DLSMforeign exchangeIt is a signal to take action.

Fifth, if the value of the J indicator exceeds 100 and is lower than 0, it belongs to the abnormal area of the price. If it is higher than 100, it is overbought, and if it is lower than 0, it is oversold.