Far back in the 19th century, Japanese candlestick charts appeared in Japan. And at almost the same time, Kagi graphics were created. But if candlesticks since then still hold their position as the most popular type of graphical analysis among traders, it is impossible to say about Kaga’s charts. This method of market analysis is rarely used. But in my opinion, it is undeservedly deprived of attention, because it can bring concrete benefits in the process of making trade decisions. That’s why I decided to tell you about Kagi.

charts in today’s article

How to build Kagee charts

Translate them manually, of course. But it’s gonna take a while. Therefore, for a long time now, traders have been using the indicator for this purpose. After installing it in the trading terminal, we will see this chart Kagi:

The main difference from our usual candlestick and bar charts is that it has no time axis. I mean, he has nothing to do with the time interval. Each line is formed until the market situation changes and the price starts to move in a different direction. The line that connects the growth line with the falling line is called the shoulder. And the line connecting the falling line to the growth line is the waist. Vertical lines can change their thickness and color. In this regard, they have two names, of course, in Japanese style: thick – Yan, thin – Yin.

How to trade on Kagi charts

Analyzing them, we should remember the following:

vertical lines indicate not only the trend direction, but also its strength;

a thinner line indicates a decrease in trading volumes, and a thicker line indicates their growth;

Leverage and waist are reversal points of price movement.

Enter the market when forming thick vertical lines after the “shoulder” or “waist”. And to close trades – when the line thickness decreases, as it indicates the reduction of volumes and a possible change of trend.

I would also like to say a few words about the indicators that are used to build Kagi charts. They may have different modifications and may differ in details that are not so important.

For novice traders Kaga charts can be difficult to read. However, this problem will no longer exist with experience. Despite the fact that this type of analysis is not very popular among traders, those who use Kagi in their trading have achieved very good results.

In order to try myself in this market analysis, you need to download the indicator and test it first on a demo account.

Fyodorov’s Inga