The KDJ indicator is actually a derived form of the Stochastic with the only difference being an extra line called the J line.
The J line represents the divergence of the %D value from the %K. The value of J can go beyond [0, 100] for %K and %D lines on the chart.
%K = 100 * (Close-LowestLow[last n periods])/(HighestHigh[last n periods]-LowestLow[last n periods])
%D = MovingAverage(%K)
When the oscillator surpasses 80 it`s considered to be overbought. When it goes down 20 it`s considered to be oversold.
Buy signal when J goes under 0 when K and J are in oversold area.
Sell signal when J goes above 100 when K and J are in overbought area.