What Is KDJ? How the K and D Lines Are Calculated and Read
Where the close sits within the last nine days' high-low range, from 0 to 100. Below 20 is usually called oversold and above 80 overbought; in a strong trend it can stay high for weeks.
Contents (5 sections)
KDJ is the stochastic oscillator in the form used on most Chinese and Hong Kong charts. It asks a simple question: within the range the stock has traded in over the last nine days, is the close near the top or near the bottom? The answer is a number from 0 to 100.
How it is calculated
- RSV (raw stochastic value) for a day is the close minus the lowest low of the last nine days, divided by the highest high minus the lowest low of those nine days, times 100. A close at the nine-day high gives 100; at the nine-day low, 0.
- K is RSV smoothed: today's K is two thirds of yesterday's K plus one third of today's RSV.
- D is K smoothed the same way: two thirds of yesterday's D plus one third of today's K.
- J is three times K minus two times D. It exaggerates the gap between K and D and can leave the 0 to 100 range.
K reacts first, D follows. A cross of K above D is the oscillator's version of a golden cross.
Rules of thumb
| Reading | What it usually means |
|---|---|
| K and D below 20 | The close has been near the bottom of its recent range: oversold |
| K and D above 80 | The close has been near the top of its recent range: overbought |
| K crosses above D below 20 | Selling pressure easing from a low level |
| K crosses below D above 80 | Buying pressure easing from a high level |
What it does not tell you
- That an extreme will reverse. In a strong uptrend the close sits near the top of its nine-day range day after day, so K and D stay above 80 for weeks. Selling every reading above 80 means selling the strongest stocks early. The same holds below 20 in a decline.
- Much in the middle. Between 20 and 80, crosses are frequent and mostly noise.
- Anything beyond nine days. It is a short-term tool; it knows nothing of the trend it sits in.
In Stock Compass
Two rule indicators are available: kdj_k and kdj_d, on daily bars, with the 9-day range and the one-third smoothing described above. The J line is not offered as a condition.
Because KDJ is fast and noisy, it works better as a timing condition inside a rule that already has a trend filter, for example price above the 50-day average and kdj_k below 20, than as a rule on its own. RSI asks a similar question over 14 days and moves more slowly; Turn your logic into buy rules shows how to combine conditions.
FAQ
What is the difference between KDJ and RSI?
Both are oscillators from 0 to 100. KDJ looks at where the close sits in the last nine days' high-low range and is faster and noisier. RSI compares the size of recent gains with recent losses over 14 days and is slower. They often agree at extremes.
Is a KDJ golden cross below 20 reliable?
It is the form of the signal with the best reputation, because it combines an oversold reading with a turn. It still fails often in a falling stock, where K and D can cross several times on the way down. Test it on your own watchlist before relying on it.
Does Stock Compass have the J line?
No. The K and D values are available as rule conditions. J is three times K minus two times D, so it adds no information beyond the two lines.
Definition only — not investment advice.