LogoLogo
Return to StockChartsCharts & ToolsArticlesChartSchoolYour Dashboard
  • 📋ChartSchool
  • Table of Contents
    • Overview
      • Why Analyze Securities?
      • Technical Analysis
      • Fundamental Analysis
      • Random Walk vs. Non-Random Walk
      • Asset Allocation and Diversification
      • John Murphy's 10 Laws of Technical Trading
      • John Murphy's "Charting Made Easy" eBook
      • Technical Analysis 101
        • TA 101 – Part 1
        • TA 101 – Part 2
        • TA 101 – Part 3
        • TA 101 – Part 4
        • TA 101 – Part 5
        • TA 101 – Part 6
        • TA 101 – Part 7
        • TA 101 – Part 8
        • TA 101 – Part 9
        • TA 101 – Part 10
        • TA 101 – Part 11
        • TA 101 – Part 12
        • TA 101 – Part 13
        • TA 101 – Part 14
        • TA 101 – Part 15
        • TA 101 – Part 16
        • TA 101 – Part 17
      • Irrational Exuberance
      • Cognitive Biases
      • Arthur Hill on Goals, Style and Strategy
      • Arthur Hill on Moving Average Crossovers
      • Multicollinearity
      • "The Trader's Journal" by Gatis Roze
        • Stage 1: Money Management
        • Stage 2: Business of Investing
        • Stage 3: The Investor Self
        • Stage 4: Market Analysis
        • Stage 5: Routines
        • Stage 6: Stalking Your Trade
        • Stage 7: Buying
        • Stage 8: Monitoring Your Investments
        • Stage 9: Selling
        • Stage 10: Re-Examine, Refine, Re-Enhance
        • Additional Reading
      • Bob Farrell's 10 Rules
      • Richard Rhodes' Trading Rules
      • Donchian Trading Guidelines
      • Why and How To Use Correlation
    • Chart Analysis
      • What Are Charts?
      • Support & Resistance
      • Trend Lines
      • Gaps and Gap Analysis
      • Introduction to Chart Patterns
      • Chart Patterns
        • Broadening Top or Megaphone Top
        • Double Top Reversal
        • Double Bottom Reversal
        • Head and Shoulders Top
        • Head and Shoulders Bottom
        • Falling Wedge
        • Rising Wedge
        • Rounding Bottom
        • Triple Top Reversal
        • Triple Bottom Reversal
        • Bump and Run Reversal
        • Flag, Pennant
        • Symmetrical Triangle
        • Ascending Triangle
        • Descending Triangle
        • Rectangle
        • Price Channel
        • Measured Move—Bullish
        • Measured Move—Bearish
        • Cup With Handle
      • Chart Types
        • Arms CandleVolume
        • CandleVolume
        • Elder Impulse System
        • EquiVolume
        • Heikin-Ashi Candlesticks
        • Kagi Charts
        • Renko Charts
        • Three Line Break Charts
        • MarketCarpets
        • Relative Rotation Graphs (RRG Charts)
        • Seasonality Charts
        • Yield Curve
      • Candlestick Charts
        • Introduction to Candlesticks
        • Candlesticks and Traditional Chart Analysis
        • Candlesticks and Support
        • Candlesticks and Resistance
        • Candlestick Bullish Reversal Patterns
        • Candlestick Bearish Reversal Patterns
        • Candlestick Pattern Dictionary
      • Point and Figure Charts
        • Point and Figure Basics
          • Introduction to Point & Figure Charts
          • Point & Figure Scaling and Timeframes
          • P&F Trend Lines
        • Classic Patterns
          • P&F Bullish Breakouts
          • P&F Bearish Breakdowns
          • P&F Signal Reversed
          • P&F Catapults
          • P&F Triangles
          • P&F Bull & Bear Traps
        • P&F Price Objectives
          • P&F Price Objectives: Breakout and Reversal Method
          • P&F Price Objectives: Horizontal Counts
          • P&F Price Objectives: Vertical Counts
        • Point & Figure Indicators
        • P&F Scans and Alerts
          • P&F Pattern Alerts
      • Chart Annotation Tools
        • Andrews' Pitchfork
        • Stock Market Cycles
        • Fibonacci Retracements
        • Fibonacci Arcs
        • Fibonacci Fans
        • Fibonacci Time Zones
        • Quadrant Lines
        • Raff Regression Channel
        • Speed Resistance Lines
    • Technical Indicators & Overlays
      • Introduction to Technical Indicators and Oscillators
      • Technical Indicators
        • Accumulation/Distribution Line
        • Alligator Indicator
        • Aroon
        • Aroon Oscillator
        • ATR Bands
        • ATR Trailing Stops
        • Average Directional Index (ADX)
        • Average True Range (ATR) and Average True Range Percent (ATRP)
        • Balance of Power (BOP)
        • Bollinger BandWidth
        • %B Indicator
        • Chaikin Money Flow (CMF)
        • Chaikin Oscillator
        • Chande Trend Meter (CTM)
        • CMB Composite Index
        • Commodity Channel Index (CCI)
        • ConnorsRSI
        • Coppock Curve
        • Correlation Coefficient
        • DecisionPoint Price Momentum Oscillator (PMO)
        • Detrended Price Oscillator (DPO)
        • Distance From Highs
        • Distance From Lows
        • Distance To Highs
        • Distance To Lows
        • Distance From Moving Average
        • Ease of Movement (EMV)
        • Force Index
        • Gopalakrishnan Range Index
        • High Low Bands
        • High Minus Low
        • Highest High Value
        • Linear Regression R2
        • Lowest Low Value
        • Mass Index
        • MACD (Moving Average Convergence/Divergence) Oscillator
        • MACD-Histogram
        • MACD-V
        • MACD-V Histogram
        • Median Price
        • Money Flow Index (MFI)
        • Negative Volume Index (NVI)
        • On Balance Volume (OBV)
        • Percentage Price Oscillator (PPO)
        • Percentage Volume Oscillator (PVO)
        • Performance Spread
        • Price Relative/Relative Strength
        • Pring's Know Sure Thing (KST)
        • Pring's Special K
        • Rate of Change (ROC)
        • Relative Strength Index (RSI)
        • Relative Volume (RVOL)
        • RRG Relative Strength
        • StockCharts Technical Rank
        • Slope
        • Standard Deviation (Volatility)
        • Stochastic Oscillator (Fast, Slow, and Full)
        • StochRSI
        • Traffic Light
        • TRIX
        • True Range
        • True Strength Index
        • TTM Squeeze
        • Typical Price
        • Ulcer Index
        • Ultimate Oscillator
        • Vortex Indicator
        • Weighted Close
        • Williams %R
      • Technical Overlays
        • Anchored VWAP
        • Bollinger Bands
        • Chandelier Exit
        • Double Exponential Moving Average (DEMA)
        • Hull Moving Average (HMA)
        • Ichimoku Cloud
        • Kaufman's Adaptive Moving Average (KAMA)
        • Keltner Channels
        • Linear Regression Forecast
        • Linear Regression Intercept
        • Moving Averages—Simple and Exponential
        • Moving Average Ribbon
        • Moving Average Envelopes
        • Parabolic SAR
        • Pivot Points
        • Price Channels
        • Triple Exponential Moving Average (TEMA)
        • Volume-by-Price
        • Volume-Weighted Average Price (VWAP)
        • ZigZag
    • Market Indicators
      • Introduction to Market Indicators
        • Market Indicator Dictionary
      • Advance-Decline Line
      • Advance-Decline Percent
      • Advance-Decline Volume Line
      • Advance-Decline Volume Percent
      • Arms Index (TRIN)
      • Bullish Percent Index (BPI)
      • DecisionPoint Intermediate-Term Breadth Momentum Oscillator (ITBM)
      • DecisionPoint Intermediate-Term Volume Momentum Oscillator (ITVM)
      • DecisionPoint Swenlin Trading Oscillator (STO)
      • High-Low Index
      • High-Low Percent
      • McClellan Oscillator
      • McClellan Summation Index
      • Net New 52-Week Highs
      • Percent Above Moving Average
      • Pring's Bottom Fisher
      • Pring's Diffusion Indicators
      • Pring's Inflation and Deflation Indexes
      • Pring's Net New High Indicators
      • Put/Call Ratio
      • Record High Percent
      • Volatility Indices
    • Market Analysis
      • Dow Theory
      • Sector Rotation Analysis
      • Intermarket Analysis
      • The DecisionPoint Chart Gallery
      • DecisionPoint Rydex Asset Analysis
      • Wyckoff Analysis Articles
        • Wyckoff Market Analysis
        • Wyckoff Stock Analysis
        • The Wyckoff Method: A Tutorial
      • Elliott Wave Analysis Articles
        • Introduction to Elliott Wave Theory
        • Identifying Elliott Wave Patterns
        • Guidelines for Applying Elliott Wave Theory
    • Trading Strategies & Models
      • DecisionPoint Trend Model
      • Trading Strategies
        • Bollinger Band Squeeze
        • CCI Correction
        • CVR3 VIX Market Timing
        • Faber's Sector Rotation Trading Strategy
        • Gap Trading Strategies
        • Harmonic Patterns
        • Hindenburg Omen
        • Ichimoku Cloud Trading Strategies
        • The 'Last' Stochastic Technique
        • MACD Zero-Line Crosses With Swing Points
        • Moving Average Trading Strategies
          • Finding Support and Resistance in Moving Averages
          • Guppy Multiple Moving Average: An MA Ribbon Designed to Tip the Market’s Hand
          • How To Trade Price-to-Moving Average Crossovers
          • Trading the Bounce: Finding Support and Resistance in Moving Averages
          • Trading the Death Cross
          • Trading Using the Golden Cross
          • Using the 5-8-13 EMA Crossover for Short-Term Trades
        • Moving Momentum
        • Narrow Range Day NR7
        • Percent Above 50-day SMA
        • Percent B Money Flow
        • The Pre-Holiday Effect
        • RSI(2)
        • Six-Month Cycle MACD
        • Slope Performance Trend
        • Stochastic Pop and Drop
        • Swing Charting
        • Trend Quantification and Asset Allocation
    • Index & Market Indicator Catalog
      • Advance-Decline Indicators
      • Cboe Indices and Indicators
      • CME Futures and Spot Prices
      • DecisionPoint Sentiment Indicators
      • Dow Jones Breadth Indicators
      • Dow Jones Global Indices
      • Dow Jones Select Indices
      • Dow Jones Titans Indices
      • Dow Jones US Indices
      • Economic Indicators
      • ICE Futures and Spot Prices
      • Intellidex Indices
      • MSCI Indices
      • New 52-week Highs and Lows for Exchanges
      • NYSE Arca Equity Indices
      • NYSE Equity Indices
      • Philadelphia Indices
      • S&P 500 Sector and Industry Groups
      • S&P GSCI Indices
      • StockCharts AD Percent
      • StockCharts AD Volume Percent
      • StockCharts Bullish Percent Index
      • StockCharts High-Low Index
      • StockCharts High-Low Percent
      • StockCharts Percent Above Moving Average
      • StockCharts Pseudo Symbols
      • StockCharts Record High Percent
      • StockCharts Theoretical Indices
      • US Treasury Yields
    • 📖Glossary
      • 📖Glossary - A
      • 📖Glossary - B
      • 📖Glossary - C
      • 📖Glossary - D
      • 📖Glossary - E
      • 📖Glossary - F
      • 📖Glossary - G
      • 📖Glossary - H
      • 📖Glossary - I
      • 📖Glossary - J
      • 📖Glossary - K
      • 📖Glossary - L
      • 📖Glossary - M
      • 📖Glossary - N
      • 📖Glossary - O
      • 📖Glossary - P
      • 📖Glossary - Q
      • 📖Glossary - R
      • 📖Glossary - S
      • 📖Glossary - T
      • 📖Glossary - U
      • 📖Glossary - V
      • 📖Glossary - W
      • 📖Glossary - X, Y, Z
    • Options Glossary
    • Educational Resources
Powered by GitBook
LogoLogo

ON STOCKCHARTS

  • Charts & Tools
  • Articles
  • StockCharts TV
  • ChartSchool

MEMBERS

  • Your Dashboard
  • Your ChartLists
  • Advanced Scans
  • Technical Alerts

HELP

  • Support Center
  • FAQs
  • Contact Us
  • Pricing

COMPANY

  • About Us
  • What's New
  • Careers
  • StockCharts Store

© StockCharts.com, Inc. All Rights Reserved.

On this page
  • What Are Kagi Charts?
  • Reversal Amount
  • Fixed Amount versus ATR
  • Yin and Yang
  • Signals
  • The Bottom Line
  • Kagi Charts In SharpCharts
  • Further Study

Was this helpful?

Export as PDF
  1. Table of Contents
  2. Chart Analysis
  3. Chart Types

Kagi Charts

PreviousHeikin-Ashi CandlesticksNextRenko Charts

Last updated 10 months ago

Was this helpful?

What Are Kagi Charts?

Kagi charts are based strictly on price action. They ignore time. In this way, Kagi charts are similar to charts. According to Steve Nison, author of Beyond Candlesticks, Kagi charts were invented in the late 19th century in Japan. They are line charts that change direction when prices move by a required amount. There is also the added aspect of yin and yang as the lines change thickness when prices break above a prior high or below a prior low.

Reversal Amount

As Kagi charts are all about reversals, chartists must start by setting the reversal amount. This can be a fixed number of points, a set percentage or a variable (ATR). Note that this reversal amount can also be based on closing prices or the high-low range. The following examples will use closing prices for simplicity. (Chartists looking for more sensitivity and more reversals can opt for the high-low range.)

The reversal amount is the minimum price change required for the Kagi line to reverse direction. Let's start with an example using a close-only chart for the S&P 500 and a 20 point reversal amount. If the Kagi line is rising and the S&P 500 reaches 1951, the Kagi line will not reverse until the S&P 500 declines to 1931 or lower (20 or more points). Conversely, if the Kagi line is falling and the S&P 500 declines to 1900, the Kagi line will not reverse until the S&P 500 advances to 1920 or higher (20 or more points).

The example below shows the upside reversals with green arrows and downside reversals with red arrows. The last Kagi value (1951.27) is marked with the y-axis label. The S&P 500, however, is currently at 1943.89, which is below the high of the Kagi line. Again, the Kagi line will not reverse until the index moves below 1931 (20 points).

The chart below shows daily close-only prices for the S&P 500. Notice that the advance from 1870.85 to 1951.27 looks different because it extends from May 15 to June 11 (yellow area).

The Kagi line ignored the date changes and rose vertically because it is based purely on price. This price focus means the x-axis (date range) will be different and irregular on the Kagi chart. A line or bar chart has a uniform x-axis with daily price data. The date on the Kagi chart doesn't change until there's a reversal. If the S&P 500 falls to 1930, more than 20 points from the Kagi high, a small horizontal line would be drawn at 1951.27, and a down line would be drawn to 1930. This new line would then warrant a date marker on the x-axis.

Fixed Amount versus ATR

The reversal amount can also be set as a percentage, a fixed amount that will not change as new data is incorporated into the chart. In other words, new price data is added every trading day, and the reversal amount will remain constant when using points or percentages.

The reversal amount is subject to change when using the ATR, a volatility measure. The default ATR is based on 14 periods and fluctuates along with price volatility. Also, note that the ATR value changes as new days and data points come into play.

When the chart is created, the reversal amount is based on the prevailing ATR value. Should the ATR value change in the following days or weeks, this new value would be used as the reversal amount. This means the look of the Kagi chart will also change. Also note that ATR values on a line or bar chart are based on the actual trading periods (14 days, 14 weeks, 14 months, etc.). Therefore, ATR values on a Kagi chart will not match ATR values on a chart with a uniform date axis.

The chart below shows a regular close-only chart ending on April 15.

The chart below shows a Kagi chart created on April 15, which is also the last date.

First, notice that the ATR value on the Kagi chart is different than the ATR value on the close-only chart. Second, notice that the ATR value from the close-only chart is used to set the reversal amount on the Kagi chart. If this Kagi chart were created in early January, the ATR reversal value would be around 12.5 and this chart would look different. Remember that ATR reversal amounts will change as new data is added to the chart. Reversal amounts based on points and percentages are fixed.

Yin and Yang

The prior Kagi charts used one color to focus on the reversals. The following Kagi charts show thick black lines for the yang lines and thin red lines for the yin lines. Note that a Kagi peak or trough forms whenever there's a reversal, marked by a small horizontal line. A yang line forms when a Kagi line breaks above the prior peak. A yin line forms when a Kagi line breaks below the prior trough.

The chart below shows some examples of yin and yang lines.

A peak can form with thick black or thin red lines. A thick black line (yang) remains in play until a break below the most recent trough. The thick black line turns into a thin red line at the break point. This thin red line (yin) remains in play until a break above the most recent peak. The thin red line then changes into a thick black line at the break point.

Signals

In Beyond Candlesticks, Steve Nison highlights several signals and setups using Kagi charts. These include buy on a new yang line, sell on a new yin line, buy rising shoulders, sell falling waists, multi-level breaks, double windows, trend line breaks, tweezers, three Buddha reversals and record sessions. Rather than cover every setup in his great book, this article will highlight a few setups with some chart examples.

The next three Kagi charts use percentage for reversal amount and the high-low range for the price field. A peak on a Kagi chart is also called a shoulder, while a trough is called a waist. Nison notes that a series of rising shoulders defines an advance, while a series of falling waists defines a decline.

The CVS chart below shows a steady advance in October–November and a decline in January. Notice how trend lines can be drawn on these charts. We can also use the troughs to mark support. The March–April waists (troughs) are used to mark a support zone.

The Humana chart below shows a pair of inverted three Buddha bottoms. As the name implies, these look like inverse head-and-shoulders patterns. The left waist forms the first low, the Buddha's head forms the middle low, and the right waist forms the third low. The Buddha low is the lowest of the three, while the other two are relatively equal. A break above resistance confirms the reversal.

Kagi peaks (shoulders) and troughs (waists) are also called levels. A series of shoulders can mark a resistance zone, while a series of waists can mark a support zone. You can look for a break of two or more levels to trigger a trend change.

The example below shows KLA-Tencor (KLAC) with a few trend line breaks and some multi-level breaks. Notice how the stock broke above three levels and broke the October trend line in February. After advancing above 71, the stock broke below the early February trend line and below three levels in early April. The far right side of the chart shows the stock breaking another trend line and moving above three levels with a surge above 64.

The Bottom Line

Like their Japanese cousins, Renko and Three Line Break, Kagi charts filter the noise by focusing on minimum price changes. Kagi lines do not reverse unless price changes by a minimum amount. Like Point & Figure charts, it is easy to spot important highs and lows, and identify key support and resistance levels. With this information, chartists can define uptrends with higher highs and higher lows or downtrends with lower lows and lower highs. As with all charting techniques, chartists should employ other technical analysis tools to confirm or refute their findings on Kagi charts.


Kagi Charts In SharpCharts

Chartists can create Kagi charts by going to the Chart Attributes section and selecting Kagi as the chart Type. This section is just under the SharpChart on the left side. You can choose points, percentage, or ATR for the reversal amount. The field can be set at close or high-low range.

If you're looking for more sensitivity, choose the high-low range and if you're looking to focus on end-of-day price data, choose the close. Yin and yang line colors can also be changed using the “up color” and “down color” dropdown menus below the SharpChart.




Further Study

Beyond Candlesticks, a book by Steve Nison, shows chartists advanced techniques for candlesticks and other technical analysis techniques that originated in Japan. Nison devotes an entire chapter to Kagi charts; additionally, he covers Three Line Break charts, Renko charts and explains how Japanese traders use moving averages.

for a live example.

Steve Nison

Beyond Candlesticks
Point & Figure
Average True Range
Click here
The green arrows point to upside reversals, whereas the red arrows point to downside reversals.
Chart showing close-only prices. Note the difference between this chart and the Kagi line chart.
A close-only chart.
Kagi chart.
Yin (thin red) and yang (thick black) lines on a Kagi chart.
Chart showing advancing and declining periods. Note the series of waists that mark a support zone.
Inverted three Buddha bottoms.
Chart showing trendline and multi-level breaks.
SharpChart settings for Kagi charts.
Kagi line chart from StockCharts.com showing upside reversals (green arrows) and downside reversals (red arrows).
A close-only line chart from StockCharts.com shows how different this is from a Kagi line chart.
A close-only chart from StockCharts.com
Kagi chart from StockCharts.com
Yin or thin red lines, and yang, thick black lines on a Kagi chart from StockCharts.com.
Kagi chart from StockCharts.com showing an inverted three Buddha bottom pattern.
Kagi chart from StockCharts.com showing trendline and multi-level breaks.
The SharpCharts settings for Kagi charts when using StockCharts.com