HOW-TO use[blackcat] L5 KDJ with Whale Pump Detector

30 dic 2023

One of the biggest differences between cryptocurrency and traditional financial markets lies in the foundational technology that underpins cryptocurrency, known as blockchain. This revolutionary technology enables individual investors to gain insights into the flow of large funds through on-chain transfers, thus providing a unique advantage in the market. These significant funds, often referred to as "Whales," have the ability to exert considerable influence over the price movements of cryptocurrencies, particularly Bitcoin. As a result, monitoring and analyzing Whale trends holds immense importance, both in terms of understanding the fundamental dynamics and leveraging technical aspects of the market.

Let's delve into the KDJ oscillator display, a powerful tool for cryptocurrency traders. Comprising three lines, namely K, D, and J, the KDJ display draws parallels with the stochastic oscillator. The K and D lines are identical to those seen in the stochastic oscillator, while the J line represents the deviation of the D value from the K value. By observing the convergence of these lines, traders can identify potential trading opportunities and capitalize on them. Moreover, similar to the Stochastic Oscillator, the KDJ display also highlights oversold and overbought levels, indicating moments when the ongoing trend is likely to reverse.

In the realm of cryptocurrency trading, the L2 KDJ with Whale Pump Detector emerges as a composite indicator that seamlessly integrates the KDJ display with the Whale Pump Detector. This integration imparts an additional layer of sophistication to the analysis process, allowing traders to filter out false signals that may arise from the KDJ display. Consequently, traders can make more informed decisions by leveraging the power of this composite indicator.

For further information and access to the L2 KDJ with Whale Pump Detector script, you can visit the following link: [L2 KDJ with Whale Pump Detector](tradingview.com/script/vDX9m7PJ-L2-KDJ-with-Whale-Pump-Detector/). However, it is important to exercise caution while using any script and ensure that you fully trust the author and comprehend the script's functionality. If you are uncertain, consider exploring open-source alternatives available within the [TradingView Community Scripts](tradingview.com/script/) section.

This article introduces the advanced version of L2 KDJ, called L5 KDJ. The L5 KDJ indicator is mainly composed of three parts.

The first part is the color band of KDJ, which changes color based on the strength of the market trend. The closer the color is to cool colors, the market tends to be bearish; if the color leans towards warm colors, it indicates a bullish market. This color change can provide valuable market information to help traders assess the current market trend and situation.

In addition, the fluctuation range of the KDJ color band is between 0 and 100. To better utilize this indicator, I set 0 to 20 as the oversold zone and 80 to 100 as the overbought zone. When the oscillator oscillates within this range, the color of the band changes, indicating the current position of the market. This setting can help traders more accurately determine overbought and oversold conditions, enabling them to make wiser trading decisions.

It should be noted that in some extreme market conditions, the color band may exhibit special color changes. In a trending market, if the color band leans towards warm colors, it indicates that the market may be in an overbought state; whereas if the color band leans towards cool colors, it may indicate an oversold market. These special color changes can help traders better understand the market conditions and take appropriate trading strategies in a timely manner.

In summary, L5 KDJ is an advanced version of L2 KDJ, which integrates the KDJ color band and the color changes of the market trend, providing traders with more useful market information. Proper use of the L5 indicator can help traders more accurately assess the market trend and position, enabling them to make wiser trading decisions.

Part 2. This is the KDJ candle in yellow and purple. These candles are key signals for generating entry and exit signals. They are generated through multiple high-order filters. The candles are divided into yellow and purple parts, where yellow represents long positions and purple represents short positions. There are also yellow and purple labels for opening and closing signals. The yellow label 'L' represents long entry, and the yellow label 'TP' represents closing long positions. Similarly, the purple label 'S' represents short entry, and the purple label 'TP' represents closing short positions. Each label is followed by an '@' symbol, followed by a percentage. This percentage represents the dynamic candle's deviation from the mean deviation value. The mean deviation value indicates whether the current market is in an extreme condition. It is not only used to determine overbought and oversold conditions and closing signals, but also to identify opportunities for short-term rebounds. This rebound strategy can be used in conjunction with the BNF. Overall, the yellow and purple candles will fluctuate above and below the KDJ color band. When the candles are far away from the color band, there is a tendency to regress. In this case, it is advisable to consider entering for a rebound or to take timely profits and exit.

In addition, the third major characteristic is the whale jump indicator. For whale departure, this is the same as my classic whale jump algorithm. Of course, here it is defined that the starting point for bullish whales is 0, and the starting point for bearish whales is 100. The color bars generated by bullish whales are purple and red, with purple indicating that bullish whales are actively buying long positions, and red indicating that bullish funds are starting to pause or relay. Bearish funds are represented by yellow and green colors, with yellow bars indicating strong bearish selling pressure and green indicating situations where bearish intensity pauses or relays.

Finally, this indicator will generate alert signals for long entry, short entry, short take profit, and long take profit, which can be implemented through the alert function. Overall, the L5 KDJ indicator has significant improvements compared to the L2 KDJ indicator. These advantages are mainly reflected in the stability of the signals, noise filtering, and accurate generation of long and short entry signals, as well as the generation of closing signals. Additionally, it also displays the deviation rate (used for BNF rebound strategy). I hope this will bring more convenience to traders.