What is KDJ?
KDJ = K line + D line + J line
It is an extension of the Stochastic Oscillator.
The three lines mean
K (Fast line) → Shows fast price changes
D (Slow line) → Smooths the trend a little
J (Extreme line) → Very sensitive, wants to capture extreme price behavior
What does it mean?
Overbought (bought too much)
Usually KDJ > 80
Price may fall (sell signal)
Oversold (sold too much)
Usually KDJ < 20
Price may rise (buy signal)
Cross Signal
If K crosses D from bottom to top → Buy signal
If K crosses D from top to bottom → Sell signal
J line
If J goes too high → Possibility of sudden price drop
If it goes too low → May suddenly rise