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KAGI CHARTS
Introduction:-
Kagi charts are thought to have been created around
the time the Japanese stock market started trading in the 1870s. Kagi charts
were introduced to the western world by Steve Nison (a well-known authority on
the Candlestick charting method). Kagi charts display a series of connecting
vertical lines where the thickness and direction of the lines are dependent on
the price action. If closing prices continue to move in the direction of the
prior vertical Kagi line, that line is extended. However, if the closing price
reverses by a pre-determined "reversal" amount, a new Kagi line is drawn in the
next column in the opposite direction. An interesting aspect of the Kagi chart
is that when closing prices penetrate the prior column's high or low, the
thickness of the Kagi line changes.
To draw Kagi lines,
compare the close to the ending point of the last Kagi line. If the price
continues in the same direction as the prior line, the line is extended in the
same direction, no matter how small the move. However, if the closing price
moves in the opposite direction by the reversal amount or more (this could take
a number of sessions), then a short horizontal line is drawn to the next column
and a vertical line is continued to the new closing price. If the closing price
moves in the opposite direction of the current column by less than the reversal
amount then no lines are drawn.
In addition, if a thin Kagi
line exceeds the prior high point (on the Kagi chart), the line becomes thick.
Likewise, if a thick Kagi line breaks a prior low point, the line becomes thin.
Assumptions / Predictions:-
Kagi charts are thought to have been created around the time the Japanese stock
market started trading in the 1870s. Kagi charts were introduced to the western
world by Steve Nison (a well-known authority on the Candlestick charting
method). Kagi charts display a series of connecting vertical lines where the
thickness and direction of the lines are dependent on the price action. If
closing prices continue to move in the direction of the prior vertical Kagi
line, that line is extended. However, if the closing price reverses by a
pre-determined "reversal" amount, a new Kagi line is drawn in the next column in
the opposite direction. An interesting aspect of the Kagi chart is that when
closing prices penetrate the prior column's high or low, the thickness of the
Kagi line changes.
To draw Kagi lines,
compare the close to the ending point of the last Kagi line. If the price
continues in the same direction as the prior line, the line is extended in the
same direction, no matter how small the move. However, if the closing price
moves in the opposite direction by the reversal amount or more (this could take
a number of sessions), then a short horizontal line is drawn to the next column
and a vertical line is continued to the new closing price. If the closing price
moves in the opposite direction of the current column by less than the reversal
amount then no lines are drawn.
In addition, if a thin
Kagi line exceeds the prior high point (on the Kagi chart), the line becomes
thick. Likewise, if a thick Kagi line breaks a prior low point, the line becomes
thin.
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