The KDJ indicator is a technical analysis tool that combines the concepts of the Stochastic Oscillator and the Moving Average. It helps traders identify potential market trends and overbought or oversold conditions. The indicator consists of three lines: %K, %D, and the J line.

The %K line represents the current price's relative position within a specified range. The %D line is a moving average of the %K line, smoothing out fluctuations. The J line represents the difference between %K and %D.

Traders use the KDJ indicator to spot potential buy and sell signals. When the %K line crosses above the %D line, it suggests a bullish signal, indicating a potential buying opportunity. Conversely, when the %K line crosses below the %D line, it indicates a bearish signal, suggesting a potential selling opportunity.

The KDJ indicator helps traders gauge the momentum and strength of a market trend. It is particularly useful in identifying potential reversals or divergences between price and the indicator. By incorporating the KDJ indicator into their analysis, traders can make more informed trading decisions based on the signals it generates.