How to interpret KDJ to identify buy and sell points

The KDJ indicator consists of the K line (fast line), D line (slow line), and J line (auxiliary line), with the J line being the most sensitive.

The indicator values have 20 and 80 as key boundaries: below 20 is the oversold zone, above 80 is the overbought zone, and between 20-80 is the hovering zone.

When the K line crosses above the D line to form a golden cross while in the oversold zone, it is a relatively reliable buy signal.

When the K line crosses below the D line to form a death cross while in the overbought zone, it is a relatively reliable sell signal.

A top divergence occurs when the price reaches a new high but the KDJ indicator does not, indicating weakening upward momentum. A bottom divergence occurs when the price reaches a new low but the KDJ does not, indicating weakening downward momentum.

In a one-sided market with sharp rises and falls, KDJ may exhibit a phenomenon of dullness, leading to a temporary failure of the indicator; at this time, other indicators should be referenced.

The most effective strategy is to use MACD in conjunction with KDJ; when both generate a golden cross simultaneously, the reliability of the buy signal greatly increases.

In a bullish market where MACD is above the zero axis, the accuracy of the KDJ golden cross will be higher, making it suitable as a reference signal for increasing positions.

When using KDJ, avoid chasing highs and cutting losses; if combined with multiple indicators like Bollinger Bands and RSI for comprehensive judgment, the effect will be even better.

Remember the mantra of observing the position of golden crosses and death crosses, identifying trends through divergence and dullness, strictly setting profit-taking and stop-loss levels, using light positions to test errors, and relying on the resonance of multiple indicators as the best trading opportunity.