KDJ takes today's closing price (that is, the final bargaining between long and short parties within N days) as the balance point of purchasing power and efforts. The distance from the lowest price to the lowest price represents purchasing power, and the distance from the highest price to the lowest price represents total purchasing power. In this way, the ratio of RSV buying to total buying represents the scale ratio of market buying since N days, reflecting the long and short situation of the market. Later, the auditor of KDJ index gave up taking RSV as the k value directly, and only took RSV as 1/3 of the new k value. This is a weighted method, which shows that more emphasis (2/3 emphasis) is placed on the role of recent trends. The convergence and divergence of J value, D value and K value, as well as the coefficients 3 and 2 also show the weight treatment, which shows that D index should pay more attention to KD index, which is the consistent principle to show the trend analysis of slow line trend.
In fact, on the D line, it is a buy signal, and on the down line, it is a sell signal. KD fluctuates in the range of 0 ~ 100, and 50 is a multi-space equilibrium line. If you do more, 50 is the callback support line. If you are in a bear market, 50 is the pressure line for the rebound. The low K-line crossing D is a buy signal and the high K-line crossing D is a sell signal. K line enters the overbought area above 90, and enters the overbought area below 10. Line D enters the overbought area above 80 and the overbought area below 20. Pay attention to the timing of doing business. The M-shaped trend of the D-line in high-grade areas is a common top-type pattern, and the second head-type and the second K-line crossing the D-line are selling signals. The W-shaped trend of the low D-line is a common bottom, and the second bottom and the second upper intersection of the K-line are buying signals. When the second part of the M-shape or W-shape appears, if it deviates from the price direction, it is called? Top back? And then what? Butt back? The trading signal is very reliable.
J can be greater than 100 or less than 0. The J index provides a reliable judgment on whether actions can be taken according to the trading signal of KD. Generally speaking, the J value greater than 100 or less than 10 is considered as the time to take buying or selling actions. It is a random fluctuation index, so the value of n in the formula is generally small, between 5- 14, which can be selected according to the characteristics of the market or goods. Applying KDJ to weekly or monthly charts can also be used as medium and long-term forecasting software.