KDJ

Type

Momentum Indicator, using a divergence line

How does it work?

The KDJ indicator is actually a derived form of the Stochastic with the only difference being an extra line called the J line.

The J line represents the divergence of the %D value from the %K. The value of J can go beyond [0, 100] for %K and %D lines on the chart.

Trading Signals

A negative value of J combined with %K and %D at the bottom range indicates a strong over sold signal.

Likewise, when the J value goes above 100, combined with %K and %D at the top range, it will indicate a strong over bought signal.

Settings

Sharechart Default: 14 period, 3 period, 1 period

Example

The AXA chart below traded between a support and resistance point and using the KDJ indicator we can identify these points as oversold and overbought.

To change settings, go to Settings>Indicators>KDJ. The chart above had the following settings: