1. When the KDJ curve is at a high level above 50, if the trend of the KDJ curve forms a top reversal shape such as M-head or triple-top, it may indicate that the exchange rate will turn from strong to weak, and the exchange rate will plummet, so the draft should be sold in time. If the curve of exchange rate shows the same pattern, it can be confirmed that its decline can be judged by M-head or triple-top 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 W bottom or triple bottom bottom, it may indicate that the exchange rate will turn from weak to strong, and the exchange rate will rebound upward soon, so it can absorb a small amount of foreign exchange on dips. If the exchange rate curve shows the same pattern, it can be confirmed that its increase can be judged by W-bottom or triple bottom's morphological theory.
3. In the form of KDJ curve, the accuracy of M head and triple top is greater than that of W bottom and triple bottom.
Intersection point of KDJ curve
The intersection of KDJ curves can be divided into two forms: golden intersection and dead intersection.
Generally speaking, in the process of a bill's complete upward trend and downward trend, there will be two or more golden crosses and death crosses on the K, D and J lines in the KDJ index.
1. When the exchange rate is consolidating at a low level for a long time, and the K, D and J lines are all below the 50 line, once the J line and the K line break through the D line almost at the same time, it indicates that the foreign exchange market is about to strengthen, and the decline of the exchange rate has ended and will stop falling upward. You can start buying drafts and open positions in the medium and long term. This is a golden cross form of KDJ indicator.
2. When the exchange rate is consolidating during a period of rising, and the K, D and J lines are hovering around the 50-line, once the J line and the K line break through the D line again almost at the same time, the trading volume is released again, indicating that the foreign exchange market is in a strong position and the exchange rate will rise again. You can buy bills of exchange or hold foreign exchange to rise, which is a form of KDJ indicator gold crossing.
3. When the exchange rate rises for a long time in the previous period and the exchange rate rises greatly, once the J-line and the K-line break through the D-line at a high level (above 80) almost at the same time, it indicates that the foreign exchange market will soon turn from strong to weak and the exchange rate will plummet. At this time, most bills of exchange should be sold, not bought, which is a form of the death cross of KDJ indicators.
4. When the exchange rate fell after a period of time, lacking the motivation for the upward rebound of the exchange rate, and various moving averages exerted strong pressure on the exchange rate, the KDJ curve briefly rebounded to the vicinity of the 80th line, but failed to return to above the 80th line. Once the J-line and K-line break through the D-line again, it indicates that the foreign exchange market will once again enter an extremely weak market, and the exchange rate will also fall, so it is another form of the death cross of KDJ indicators.