KDJ Overbought and Oversold
Zones
Learn about the traditional KDJ overbought and oversold zones, and how they compare to the RSI thresholds covered in the previous unit.
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This lesson explores the traditional overbought and oversold reference levels used with KDJ, building on the K, D and J line concepts from earlier in this unit.
The levels described in this lesson have been verified against multiple technical analysis education sources.
The Traditional KDJ Overbought and Oversold Levels
Readings above 80 are traditionally considered overbought, and readings below 20 are traditionally considered oversold, most commonly referenced in relation to the D line specifically, though sometimes discussed in relation to K and J as well. These thresholds are somewhat wider than the traditional RSI levels of 70/30 covered in the previous unit.
The J Line's Extended Range
As covered in the earlier lesson, the J line can extend beyond the standard 0β100 range that bounds K and D. Some technical analysis education discusses a J line reading above 100, or below 0, as reflecting a particularly extreme, amplified overbought or oversold condition, given the J line's role in exaggerating the gap between K and D.
Overbought and Oversold Do Not Guarantee Reversals
As with the RSI overbought/oversold concept covered in the previous unit, reaching these KDJ thresholds does not, by itself, guarantee that a reversal is imminent. This connects directly to the ranging versus trending markets lesson later in this unit, which explores how KDJ's high sensitivity can lead to these zones being reached frequently, including during conditions where a sustained reversal does not follow.
Comparing to RSI's Thresholds
The wider 80/20 KDJ thresholds, compared to RSI's 70/30, partly reflect KDJ's generally higher sensitivity (discussed further in the final lesson of this unit) β a narrower overbought/oversold range might otherwise be triggered too frequently given how responsively KDJ, particularly the J line, tends to move.
π Summary
KDJ readings above 80 are traditionally considered overbought and below 20 oversold β wider thresholds than RSI's 70/30, partly reflecting KDJ's generally higher sensitivity β with the J line's ability to extend beyond 0β100 sometimes discussed as reflecting particularly extreme conditions. As with RSI, reaching these levels does not, by itself, guarantee a reversal is imminent.
Frequently Asked Questions
What is the traditional KDJ overbought level?
Readings above 80 are traditionally considered overbought, most commonly referenced in relation to the D line.
What is the traditional KDJ oversold level?
Readings below 20 are traditionally considered oversold.
What does an extreme J line reading suggest?
Some technical analysis education discusses a J line reading above 100 or below 0 as reflecting a particularly extreme, amplified overbought or oversold condition.
Why are KDJ's thresholds wider than RSI's?
This partly reflects KDJ's generally higher sensitivity, since a narrower range might otherwise be triggered too frequently.
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