JMA KDJ with RSI OB/OS Signals

The JMA KDJ with RSI OB/OS Signals indicator provides a sophisticated take on the traditional KDJ stochastic oscillator by integrating Jurik Moving Averages (JMA) for enhanced smoothing and responsiveness. This tool identifies potential trend reversals and momentum shifts through the interaction of smoothed K, D, and J lines, complemented by RSI-based overbought and oversold signals.

Usage

The tool is primarily used to identify momentum exhaustion and potential trend changes. The "J" line acts as a measure of divergence between the "K" and "D" lines; when the J line becomes overextended into extreme territories, it highlights a high probability of a mean-reversion move.

• Cross Signals: Triangles at the top or bottom of the pane indicate crosses between the J line and the KD average, signaling potential entry or exit points.
• RSI Integration: Blue circles appear on the price chart when the RSI is in overbought (>70) or oversold (<30) territory, providing additional context for trend strength or potential pullbacks.
• Divergences: The script can automatically detect and plot regular and hidden bullish/bearish divergences between price and the oscillator lines.
• Bar Coloring: Users can color candlesticks based on the J line or KD average position relative to a centerline or gradient, allowing for easier trend visualization directly on the chart.

Details

This implementation replaces the standard Running Moving Average (RMA) used in traditional KDJ indicators with Jurik Moving Averages. The JMA is known for its ability to filter market noise effectively while maintaining very low lag, which results in cleaner crossovers and fewer false signals compared to standard smoothing methods.

By default, the script averages the K and D lines into a single "KD" line to reduce visual clutter, though users can toggle this to see individual lines. The J line is calculated as $3 \times K - 2 \times D$, effectively magnifying the convergence and divergence of the underlying stochastic components.

Settings

KDJ

• Check to Plot Average of K & D: Toggles between showing individual K and D lines or a single averaged KD line.
• Period: The lookback period for the stochastic calculation.
• Jurik Source: The price source used for JMA calculations.
• Jurik Period/Phase/Power: Parameters that control the responsiveness and smoothing intensity of the Jurik Moving Average.

Color

• Bar Color: Enables or disables candlestick coloring.
• Bar/J/KD Color Selection: Options to choose between Gradient coloring (based on position in the 0-100 range) or Centerline coloring (based on the 50 level).
• Timeframe Reference: Allows the coloring logic to be calculated based on a different timeframe than the current chart.

RSI

• RSI Source/Period: Standard parameters for the underlying RSI calculation.
• RSI Signals: Color selection for the OB/OS symbols.

Divergences

• Source Select: Choose whether to calculate divergences based on the J line or the KD line.
• Pivot Period Left/Right: Sets the required number of bars for pivot detection.
• Bullish/Bearish/Hidden: Toggles for different types of divergence labels and lines.

FAQ

How do I interpret the "J" line?

The J line represents the divergence between K and D. When it reaches extreme values (above 100 or below 0), it suggests the price is significantly overextended relative to its recent range.

Why does this version look smoother than a standard KDJ?

This indicator utilizes the Jurik Moving Average (JMA) algorithm, which is mathematically optimized to reduce noise and "jitter" without the lag typically associated with simple or exponential moving averages.

How can I access the JMA KDJ with RSI OB/OS Signals?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.