When a thin Kagi line exceeds highest point of the previous value, the line gets thicker. The Thick Line The number of false reversals began to show traders that bullish interest in the stock was increasing, but that the true overall trend remained in the bears' control. Forex trading can offer many different benefits to traders — but to make …. Before you start building A Kagi chart, take into account the parameters listed below:. Newbie and expert traders alike can … What moves currency prices in Forex Markets?
If a thick Kagi line moves downward and gets below the previous bottom point, the line gets thinner. In case Yin exceeds previous shoulder, exceed of Yang takes place. If Yang is lower than the previous waist, conversion to Yin takes place. Any vertical line can contain uncertain duration. If the price moved within a certain range, did not drop down and did not grow for threshold value, then the chart remains unchanged. What is Acceleration oscillator? How to use Accumulation Distribution Indicator?
How to trade On Balance Volume Indicator? We will be pleased to answer any questions you may have. Huckster Forex Advisors Shop. Before you start building A Kagi chart, take into account the parameters listed below: Interpretation of chart in the terms of Yin and Yang: Yin — thin line Yang — thick line Waist — connection of decline line with growth Shoulder — connection of growth line with decline In case Yin exceeds previous shoulder, exceed of Yang takes place.
As the price fell, a vertical line was created on the kagi chart, and the bottom of this vertical line was equal to the lowest closing price. If the next period's close were to be lower than the current bottom on the line, then the line would continue to extend downward to equal the new low. As seen from the chart below, the reversal is shown by a small horizontal line to the right followed by a vertical line in the direction of the reversal.
The reversal was good news for many traders because this was the first bullish kagi signal that was generated since the chart was created in early May. The downward reversal is shown on the chart as another horizontal line to the right followed by a line moving in the downward direction. As you can see from Figure 4 below, the bulls and bears spent the following few weeks fighting over the direction of Apple shares, causing the kagi chart to reverse directions several times.
These moves represented an increasingly bullish sentiment, but they were not strong enough to fully reverse the downtrend. To learn more, read Retracement Or Reversal: The Thick Line The number of false reversals began to show traders that bullish interest in the stock was increasing, but that the true overall trend remained in the bears' control. A move that surpasses a previous Kagi high like the one shown in the figure below causes the line of the kagi chart to become bold.
A shift from a thin line to a bolded line, or vice versa, is used by traders to to signal buy or sell transactions. Buy signals are generated when the kagi line rises above the previous high, turning from thin to thick. Sell signals are generated when the kagi line falls below the previous low and the line changes from thick to thin. As you can see in Figure 6, the Kagi chart reversed directions after the sharp run up, but it takes more than a simple reversal to change the thickness of the line or create a transaction signal.
In this example, the bears were unable to send the price below the previous low on the kagi chart. When the bullish momentum continued again in mid-August, the price shifted back in the upward direction, creating a new swing low that will be used to create future sell signals.
Ultimately, the bulls were unable to push the price of Apple shares back below the low, causing the kagi chart to remain in a bullish state for the remainder of the tested period. The lack of a sell signal enabled traders to benefit from the strong uptrend without being taken out by random price volatility. Longer-Term Example Now that we have an understanding of how a Kagi chart generates transaction signals, let's take a look at a longer-term example using the chart of Apple Computers Nasdaq: Notice how a move above a previous high causes the line to become bold, while a move below a low causes the line to become thin again.