How can secondary chart indicators be used in conjunction with primary chart indicators for buying and selling knowledge?

There are two common indicators on the secondary chart: one is the MACD indicator, which stands for Moving Average Convergence Divergence; the other is the KDJ indicator, known as the Stochastic indicator.

From the names, it can be seen that MACD is a moving average line that has been smoothed. During this process, the advantages and disadvantages of MACD are revealed; similarly, the stochastic indicator of KDJ can also reflect its relatively sensitive characteristics.

MACD Indicator:

Firstly, let's talk about the MACD indicator. Its advantage is that once it is smoothed, it can highlight its trend nature. After a certain period, its line will not easily rise or turn downward in a short time.

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The moving smoothing of MACD has a trend characteristic, but its disadvantage is a lack of sensitivity. In the MACD indicator, we generally use the crossover between its fast line and slow line. When the stock price or the fast line crosses from the bottom, from below the zero axis, or from above the zero axis, when the fast line crosses upward through the slow line from the bottom, we call this a golden cross.

Golden crosses often appear below the zero axis. When the fast line crosses downward through the slow line from the top, this forms a death cross, which is generally used as a signal for us to sell. Therefore, MACD usually looks at its golden cross and death cross, which is its most common method of use.

When a golden cross appears, we perform a buying operation; when a death cross appears, we perform a selling operation. However, when a golden cross is formed, the stock price is no longer at its lowest point when buying, and it is very likely that it has already risen for a few days. Similarly, when a death cross occurs, the stock price is not at its highest point, but has already slid down from the highest point by a certain distance.

How to use the trend advantage of MACD to avoid its relative lag?We can coordinate with the KDJ stochastic indicator for an operation.

The KDJ stochastic indicator is generally used based on the values within the range of 0-100. When the KDJ is within the range of 0 to 20, it is in an oversold state, and there is a high likelihood of a price increase in the subsequent market.

When the KDJ indicator is at a high level of 80-100, it is in an overbought state, meaning that there has been excessive buying, followed by encountering resistance levels and insufficient momentum, so at this time, there is often a possibility of a price adjustment afterwards.

Especially when the range of 0-20 is in an overbought state, and we judge that the market may rise in the future, we need to pay attention to one point: if the KDJ indicator moves horizontally, not sharply upward, then the market may continue to fall.

Therefore, this is similar to what we discussed earlier about the stock price moving upward, the moving average line must be steep, preferably at 45 degrees or above, so that the trend will be better. The same applies to KDJ; although it is at the bottom range of 0 to 20, if it does not quickly form a crossing upward—where the value rises sharply, but instead moves horizontally, then the market is very likely to continue falling.

We generally consider the range of 80-100 to be overbought, and the market may adjust afterwards, but if the KDJ indicator also moves horizontally, then the market may continue to rise. This means that in the stock price, we reflect the state of the strong getting stronger. Therefore, the advantage of the KDJ stochastic indicator is that we utilize its sensitive response and its precise numerical range; they are quantified, with 0-20 being oversold and 80-100 being overbought. These have numerical quantifications, and when they enter these ranges, they alert and draw our attention.

We use the sensitivity of the KDJ stochastic indicator to address the lag of the MACD, using its trend but avoiding its slow response. By combining MACD and KDJ, we form an indicator combination between the two, which will address their respective shortcomings and form a complementarity, that is, to play to strengths and avoid weaknesses.

Therefore, on the secondary chart, we often use these two indicators and then combine them with the primary chart indicators we discussed earlier, regarding the buying and selling of the K-line relative to the stock price moving average, to form a buying or selling operation with a higher success rate.Here is the translation of the provided text into English:

This is how we combine the auxiliary chart, MACD, and the KDJ indicator. We are only briefly discussing the combination between the two for now. Later, we will have a dedicated explanation for the indicators, so we won't go into detail about other indicators here. These are two indicators that I commonly use in actual operations, and I will introduce them simply to you.

Conditions for K-line pattern analysis

What conditions does this pattern need to have? There are four main conditions:

The first is a clear formation of a K-line combination at the top or bottom of the chart, indicating that it is very likely to be a top or bottom. At this time, K-line pattern analysis can be applied.

The second is that it appears above or below the moving average line. If the stock price is at the position of the moving average line, it is actually ambiguous, either up or down. Therefore, it must be above or below the moving average line. If it is above, we consider it as the clear top pattern from point one. If it is below, and the stock price is below the moving average line, we consider it as the formation of its bottom.

The third is regarding the moving average line. If we use a 5-day moving average and a 10-day moving average, using two lines can add new judgments and also increase the complexity of the interface. If we consider the 5-day moving average crossing the 10-day moving average line going up or down, if it goes up, we consider the stock price to rise in the short term. If it goes down, we consider the stock price to fall in the short term, and then combine it with other indicators.

The fourth is to combine the auxiliary chart indicators to cooperate in identifying the signs of topping or bottoming, the decline after topping, and the rise after bottoming, to make a judgment on the top or bottom, and thus carry out a buying or selling operation. These are the four conditions for K-line pattern analysis.

Let's summarize the technical indicators and the K-line buying and selling we discussed earlier. In essence, all technical indicators are calculations of past historical prices to deduce the future, and they inevitably have a lag. Therefore, it is not wise to use a single indicator alone. We should combine the trend, the trend of candlestick patterns, and auxiliary chart indicators to confirm the buying and selling points, increasing our trading success rate.

That concludes all the content for today. Welcome everyone to follow, like, and share!