The stochastic indicator KDJ mainly analyzes the phenomenon of overbought and oversold on the price, the deviation of the trend and the cross-break of the K line, D line and J line, etc. through the graphical relationship of the three curves K, D and J, so as to predict the stock price Medium, short and long-term trends. KDJ is a well-known analysis tool for most investors in the market, but when it is used, investors may find that the analysis results of KDJ are very different from the actual trend, and sometimes they will come to the opposite conclusion. It is mainly because most investors only know the general analysis principles and methods of KDJ, but little is known about some connotations and specific analysis skills of KDJ analysis indicators. This section introduces the general research and judgment techniques and analysis methods of the popular KDJ in the market, focusing on digging out the internal laws of KDJ indicators, and analyzing some special research and judgment functions of KDJ in detail.
The KDJ indicator is three curves. When applied, the general research criteria for the KDJ indicator are mainly from the values of the three parameters of KDJ, the shape of the KDJ curve, the intersection of the KDJ curve, the deviation of the KDJ curve and the deviation of the K line, D line, and J line. There are six aspects to consider, including the operating status and the coordination of the KDJ curve and the price curve.
Value of KDJ
- Value range
In the KDJ index, the value range of K value and D value is 0-100, and the value range of J value can be more than 100 and less than 0, but the analysis range of KDJ in analysis software is 0-100. Generally speaking, in terms of sensitivity, the J value is the strongest, followed by the K value, and the D value is the slowest, and in terms of safety, the J value is the worst, K value is the second, and the D value is the most stable.
- Overbought and oversold signals
According to the value of KDJ, it can be divided into several areas, namely overbought area, oversold area and wandering area. According to the general division standard, the three values of K, D and J below 20 are oversold areas, which are buy signals; the three values of K, D, J above 80 are overbought areas, which are sell signals; K, D The three values of J and J are between 20 and 80, which is a wandering area, and it is advisable to wait and see.
- Comparison of long and short power
Generally speaking, when the three values of K, D, and J are near 50, it indicates that the long and short sides have a balanced power; when the three values of K, D, and J are all greater than 50, it indicates that the multiple forces are dominant; when the three values of K, D, and J are dominant When the values are less than 50, it means that the air force is dominant. 2. The shape of the KDJ curve
The research and judgment of KDJ indicator can also be analyzed from the shape of KDJ curve. When the KDJ indicator curve graph forms a head and shoulder top and bottom shape, a double top and bottom shape (ie, M head and W bottom), and a triple top and bottom shape, it can also be analyzed according to the morphological theory. The various forms of the KDJ curve are an analysis method to judge the market trend and determine the timing of trading. In addition, the KDJ indicator curve can also draw trend lines, pressure lines and support lines.
1) When the KDJ curve is high above 50, if the trend of the KDJ curve forms a top reversal pattern such as M head or triple top, it may indicate that the market will change from strong to weak, and the exchange rate will fall sharply. If the curve of the candlestick also shows the same pattern, it is more confirmable, and its decline can be judged by using M-head or triple-top pattern theory.
2) When the KDJ curve is at a low level below 50, if the trend of the KDJ curve shows a bottom reversal pattern such as a W bottom or a triple bottom, it may indicate that the market will change from weak to strong, and the price will rebound and rise. If the same pattern appears in the stock price curve, it can be confirmed, and its increase can be judged using the W-bottom or triple-bottom pattern theory.
3) The accuracy of the M head and triple top patterns in the KDJ curve is greater than that of the W and triple bottoms.