Which one should I believe when the KDJ crosses in the monthly level but the MACD still crosses?

A monthly KDJ cross suggests a potential long-term trend shift, but conflicting MACD signals require further analysis and caution.

Jun 18, 2025 at 04:35 pm

Understanding KDJ and MACD in Cryptocurrency Trading

In cryptocurrency trading, technical analysis plays a crucial role in predicting market movements. Two of the most commonly used indicators are KDJ (Stochastic Oscillator) and MACD (Moving Average Convergence Divergence). These tools help traders make informed decisions by analyzing historical price data and volume. However, when these indicators give conflicting signals, such as when the KDJ crosses in the monthly level but the MACD still diverges, it can create confusion.

What Does a Monthly Level KDJ Cross Mean?

The KDJ indicator is composed of three lines: the %K line, the %D line (a smoothed version of %K), and the %J line (which represents the divergence). A cross in the KDJ typically refers to the intersection of the %K and %D lines. When this happens on the monthly chart, it suggests a long-term trend shift may be underway.

• If the %K line crosses above the %D line in overbought territory (above 80), it could indicate a strong bullish signal.
• Conversely, if the %K line crosses below the %D line in oversold territory (below 20), it might suggest a bearish reversal.

However, because the monthly chart reflects long-term trends, such signals should not be taken lightly and often require confirmation from other indicators like MACD.

Interpreting MACD Behavior During KDJ Crosses

The MACD indicator consists of two moving averages and a signal line. It helps identify momentum and potential reversals. When the MACD line crosses above the signal line, it indicates a bullish trend, while a cross below suggests bearish momentum.

If the KDJ shows a bullish crossover on the monthly chart, but the MACD has not yet confirmed the same direction, traders face a dilemma. This discrepancy could mean that:

• Short-term momentum hasn’t aligned with long-term sentiment.
• There’s uncertainty in the market that needs resolution.
• The asset may be consolidating before breaking out or breaking down.

This divergence between KDJ and MACD should prompt further investigation into supporting factors such as volume, support/resistance levels, and broader market conditions.

Steps to Analyze Conflicting Signals Between KDJ and MACD

When facing a scenario where the KDJ crosses in the monthly level but the MACD remains neutral or contradictory, follow these steps for a comprehensive evaluation:

• Check the time frame alignment: Ensure both indicators are analyzed on the same time frame. Sometimes discrepancies arise due to mismatched periods.
• Look at the histogram bars in MACD: Increasing bar height indicates strengthening momentum. If the histogram is expanding despite the lack of a clear cross, it might foreshadow an upcoming move.
• Assess the position of the KDJ lines relative to overbought/oversold zones: If the KDJ cross occurs near extreme levels, its reliability increases significantly.
• Observe candlestick patterns: Look for engulfing patterns, dojis, or hammers around the time of the KDJ cross to gauge market sentiment.
• Use volume indicators: High volume during the KDJ cross can validate the strength of the signal even if the MACD hasn’t caught up yet.

By combining these observations, traders can better interpret whether the KDJ or MACD should take precedence in decision-making.

Managing Risk Amid Indicator Discrepancies

Conflicting signals between KDJ and MACD can increase the risk of making incorrect trades. Therefore, it's essential to implement risk management strategies:

• Set tighter stop-loss orders: Since the market is sending mixed messages, reducing exposure can protect capital.
• Avoid large position sizes: Only commit a small percentage of your portfolio until clarity emerges.
• Wait for additional confirmation: Delay entry until another indicator or price action confirms the initial signal.
• Monitor related assets: Correlated cryptocurrencies might show clearer signals that can guide your decision.
• Use trailing stops if entering early: This allows locking in profits while giving the trade room to breathe.

These measures ensure that traders remain cautious without missing potential opportunities once the market resolves the conflict between the indicators.

Frequently Asked Questions

Why does KDJ sometimes give false signals on the monthly chart?

The KDJ indicator is sensitive to price extremes and can generate false signals, especially in highly volatile crypto markets. On the monthly chart, this sensitivity can result in premature crossovers that don’t lead to actual trend changes. Traders should always cross-reference with other tools like RSI or Bollinger Bands to confirm.

Can I rely solely on MACD if KDJ is conflicting?

While MACD is a robust trend-following momentum indicator, relying solely on it can be risky. In situations where the KDJ gives a strong monthly-level signal, ignoring it entirely may cause you to miss long-term moves. A balanced approach using multiple indicators and price action is generally safer.

How long should I wait after a KDJ cross on the monthly chart?

There’s no fixed waiting period, but many traders observe the next 1–2 weeks for signs of confirmation. During this time, they monitor shorter time frames (like daily or 4-hour charts) for MACD alignment or candlestick patterns that support the KDJ signal.

Are there specific cryptocurrencies where KDJ and MACD conflicts are more common?

Highly volatile altcoins tend to experience more frequent KDJ-MACD conflicts due to erratic price swings. Established coins like Bitcoin and Ethereum usually offer more coherent signals, though discrepancies still occur during major market shifts or regulatory news events.