When the three KDJ lines (K, D, and J) converge at one level, it means the market is in a state of balance with no clear impulse either up or down.

What could this mean?

1. Market in a flat

• If the three lines are moving horizontally and close to each other, it indicates low volatility and a lack of strong trend.

• In such cases, it's better to wait for a breakout or confirmation of direction.

2. Preparing for Impulse

• If K, D, and J have compressed into a narrow range, this may indicate accumulation before a strong movement.

• It is important to look at volumes and other indicators (e.g., Bollinger Bands or cluster analysis) to understand where the impulse will be.

3. Trend Uncertainty

• If there was a strong movement before and then KDJ 'froze', this may be the end of the trend and the market is looking for a new direction.

What to do in such a situation?

• Wait for a breakout → If KDJ starts to diverge (K up, D up, J sharply up or down), this will signal a movement.

• Look at the price → If it is at a strong level, prepare to enter after a breakout or bounce.

• Check volumes → An increase in volume when the KDJ lines diverge often confirms direction.

What is KDJ?

The KDJ indicator is an extended version of the Stochastic Oscillator, which helps identify trends, overbought/oversold conditions, and potential price reversals.

Why is it useful?

✔ Determines entry and exit points → Shows when the market is overheated (time to exit) or too cheap (time to enter).

✔ Filters out false signals → Unlike the classic stochastic, KDJ has an additional line J that provides more accurate signals.

✔ Works in trend and flat → Can be used for both trend trading and sideways trading.

How is the indicator structured?

KDJ consists of three lines:

• K (fast line)

• D (slow line)

• J (signal line, distinguishes KDJ from stochastic)

Line J is more sensitive and shows sharp market changes.

How to use in trading?

1. Searching for overbought and oversold conditions

• If K and D are above 80, and J is rising too sharply → the market is overbought → look for short.

• If K and D are below 20, and J is falling sharply → the market is oversold → look for long.

2. Line Crossings (trading signals)

• Line K crosses D from top to bottom → signal for short.

• Line K crosses D from bottom to top → signal for long.

• Line J goes beyond 100 or -100 → a reversal is possible.

3. Divergences with price

• If the price is rising but J is falling → a reversal downwards is possible.

• If the price is falling but J is rising → a bounce upwards is possible.

Example strategy with KDJ

1. Choose a coin with good volatility (e.g., BTC/USDT).

2. Looking for levels (support/resistance).

3. Looking at KDJ on M15–H1:

• If the price is at support and KDJ is oversold + line J starts to rise → consider entering long.

• If the price is at resistance and KDJ is overbought + line J is falling → consider entering short.

4. Set stop-loss just beyond the nearest level, take profit at 2-3 times the stop.

Output

KDJ is a powerful indicator for finding entry points, especially when combined with levels and volumes. It helps filter out noise and see early price reversals.