Time intervals are completely cast aside as Kagi Charts only take price action into consideration. The word Kagi is derived from the Japanese art of woodblock printing. A Kagi or Key is an L-Shaped guide used to properly align paper for printing. Due to this, Kagi Charts are even sometimes referred to as Key Charts. The premise of Kagi Charts is fairly simple. Essentially, from the starting point (usually the first closing price), lines are drawn solely based on price action. The Up Lines (also called the yang lines) are formed during uptrends, while Down Lines (yin lines) are formed during downtrends.
As PnF chart and Range bars, Kagi chart is fully time-independent and based on price action only. Kagi chart consist of vertical lines that connected by horizontal lines.
As long as prices continue to move in the current direction, the current up line or current down line will continue. Once price reverses enough (the necessary reversal amount is set by the trader), a horizontal line is drawn and then a line is drawn in the opposite direction of the previous line, stopping at the new closing price.
There are five different types of lines that can be drawn within a Kagi Chart.
GoCharting Kagi Charts use following methods:
Gocharting as a platform allows you to plot a Chart on Chart. For example, in the Source field we can choose from a variety of parameters including other the Heikin Ashi chart close
Kagi Charts are a popular charting choice because of their ease of interpretation. Because they do not take time intervals into consideration at all, they have a way of factoring out the associated noise. When price movement is the only variable that matters, the creation of new lines gains importance. Price movements typically need to be substantial to register a line change and therefore should always be noted. Natural, small price variations that occur naturally over time can therefore be disregarded. Some common, everyday applications for Kagi Charts are basic line reversal trading signals, support and resistance discovery and a sequence-based reversal pattern.
Up Line/Down Line Reversals — Steve Nison, who brought popularity to Kagi Charts, offered the most basic interpretation of the charts. It is simple, buy in yang, sell in yin. Basically, buy in a reverse to an up line and sell in a reverse to a down line.
Support and Resistance — Oftentimes, Kagi Charts reveal areas of support and resistance.