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Kagi chart of Technical Analysis

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Kagi chart of Technical Analysis

The Kagi chart is a chart used for tracking price movements and to make decisions on purchasing stock. It differs from traditional stock charts, such as the Candlestick chart by being mostly independent of time. This feature aids in producing a chart that reduces random noise. Due to its effectiveness in showing a clear path of price movements, the Kagi chart is one of the various charts that investors use to make better decisions about stocks. The most important benefit of this chart is that it is independent of time and change of direction occurs only when a specific amount is reached. The Kagin chart was originally developed in Japan during the 1870s when the Japanese stock market started trading. [1] It was used for tracking the price movement of rice and found useful in determining the general levels of supply and demand for certain assets.

Construction

KAGI CHART
KAGI CHART

How to plot a Kagi chart:

  1. Find the starting point. The starting point is generally considered the first closing price. From this point forward, you compare each day’s closing price with the starting price.
  2. Draw a thin vertical line from the starting price to each day’s closing price, while the trend does not reverse.
  3. If a day’s closing price moves in the opposite direction to the trend by more than the reversal amount, draw a short horizontal line and a new vertical line, beginning from the horizontal line to the new closing price.
  4. If the price on a day is greater than or equal to the previous high, change to a thick line and continue the vertical line. If the price on that day is less than or equal to the previous low, then change to a thin line.

 

 

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