A Kagi Chart
Kagi charts originated in Japan, in the 1870s, where they were developed to track the price movement of rice. They are similar to Point and Figure charts and Renko charts in that they are time independent and only move when the closing price of the underlying security has advanced or declined by a predetermined amount. In the case of Kagi charts, an equal length vertical line segment is drawn for every the multiple of the predetermined amount that the price closes during a specified time period. If the price does not move by at least the predetermined amount, no line segment is drawn and if the price does reverse by the predetermine amount, a short horizontal line is drawn to the next column and a line in the new direction is drawn. The horizontal line that joins a rising line to a declining line is called a "shoulder" and the horizontal line that joins a declining line to a rising line is called a "waist".
When the line in the opposite direction moves beyond the shoulder or waist, i.e., when it exceeds the length of the line in the previous column, it changes in thickness, denoting a reversal in the direction of the trend. Thus, when a downward line moves beyond the previous wait, it becomes a thin line called a yin line; and when an upward moving line moves beyond the previous shoulder, it becomes a thick line called a yang line. A thick yang line denotes a bullish up trend while a thin yin line denotes a bearish down trend. This change from yin to yang and from yang to yin is used to generate trading signals.
The reversal amount that is used to construct a Kagi chart can be specified using absolute points, a fixed percentage, or the Average True Range (ATR).
Support and resistance lines, trend lines and other chart pattern analysis techniques can also be applied to Kagi charts.
Renko charts are similar to Point and Figure Charts but use boxes or bricks instead of X’s and 0’s with each brick being arranged diagonally when the price closes a pre-determined amount above or below the previous brick. The pre-determined amount is called the point size and a new brick is drawn for every multiple of the point size that the price moves to at the close.
No brick is drawn if the point size is not reached. This means that a brick can represent the price movement of one day or a many days. Similarly, the ...
Point and Figure Charts
The Point and Figure (P&F) chart differs from the traditional bar chart as it does not plot price movement over time. Instead it plots unidirectional price movements in one vertical column and moves to the next column when the price moves in the opposite direction. It represent an increase in price by plotting X's in the column and a decrease in price by plotting O's. Each X and O represents a box of a set size or price amount.
The chart also has a box reversal amount that determines how many boxes must occur in ...
OHLC Bar Charts
>Bar charts consist of bars, which are vertical lines with the bottom representing the low price (L) of the time-frame and the top representing the high price (H). The bars also have a horizontal dash on the right side of the bar to indicate the close price (C) for the time frame and some have a horizontal dash on the left side to indicate the open price (O).
However, not all bar charts use a horizontal dash on the left side to indicate the open price. When the open price is indicated, the bar is called a OHLC chart as it plots the open, high, low and close; when the bar chart ...
Candlestick charts have become popular in the West since the 1980s but they date back from the 1700s. The evolution of candlestick charts are generally attributed to the trading principles of a Japanese rice trader named Munehisa Homma who traded rice in 18th century Japan.
In candlestick charts plot the open price and the close price for the period to form the solid body of the candlestick. The high price and the low price are plotted as the upper and lower shadow, respectively. In this respect, they display the same information as OHLC bar ...