Blockchain and Cryptocurrency Intermediate - Differences between KDJ, ADX, and ATR Indicators

Differences between KDJ, ADX, and ATR Indicators

KDJ - Random Index
ADX - Average Directional Index
ATR - Average True Range

• KDJ - The KDJ indicator is made up of three oscillating lines; the K-line, the D-line and the J-line. While the ADX indicator is made up of only one oscillating line. While the ATR indicator is made up of only one oscillating line.

• The KDJ indicator is made up of three oscillating lines; the K-line, the D-line and the J-line. While the ADX indicator is made up of only one oscillating line. While the ATR indicator is made up of only one oscillating line.

• The KDJ indicator is beneficial for identifying market trend direction and reversal. While the ADX indicator is beneficial for measuring the strength of a trend. While the ATR indicator is beneficial for measuring price volatility.

• The KDJ indicator is great for shorter timeframe analysis. While the ADX indicator is great for mid-term and long-term timeframe analysis. While the ATR indicator is great for mid-term and long-term timeframe frame analysis.

• The default period for the KDJ indicator is 9. While the default period for the ADX indicator is 14. While the default period for the ATR indicator is 14.

• The KDJ indicator can be used to identify signal for entry and exit points by itself. While the ADX indicator needs the combination of the DI to be able to identify entry and exit points. While the ATR indicator also needs the combination of the DI to be able to identify entry and exit points.

Is the random index reliable?

In my opinion, the random index KDJ indicator is reliable because it gives a good representation of what is happening in the market in terms of trend direction and overbought and oversold. However, it is important to know that it can give a false signal that it why it is always important to combine the KDJ indicator along with other indicators for signal confirmation before making decisions.

To demonstrate the reliability of the KDJ indicator, I will be using it on the AAVE/USDT chart. On the chart, we can see that the KDJ signals matches with the price actions on the candlesticks. The black J-line crossed below the K-line and D-line which was an indication of a downward trend. The indicator also indicated an uptrend when the black J-line intersected and crossed above the K-line and D-line. The intersection is a good reversal signal which becomes an entry signal.

AAVE/USDT Chart