After studying the Renko graphs, we now analyse the Kagi graphs, whose name derives from a Japanese man ( Mr. Kagi infact ) that was born during the growth of the japanese market, around 1870.

The Kagi graphs are made by showing the price and not the time. On the Kagi graph the evolution of prices is represented by two lines: the thick and green one is for the ascending tendency and the thin, red line is for the descending trends. The thickness of the lines derives from the japanese culture: the yang is the beauty, thus the thick and green line. The Yin, the ugliness, is red and thin.

The color change happens when the values of the previous maximums and minimums are exceeded in the given trend. If you are drawing a green line and the price goes down but not below the trend’s minimum point, the line will continue to be green. On the other hand, if the price goes beneath the minimum point, the line will become red.

When the price chances direction, therefore from ascending to descending, you will need to draw a straight and horizontal line called “inflection line” and then move towards the new direction.