Kagi (schedule)
Kagi (Jap か ぎ 足.) - Used in the technical analysis of the graph of quotations the object of trade (goods, securities, currencies), which displays the direction of the price change in the form of a succession of vertical lines of different thickness, connected by a short horizontal line segments of equal length. Kagi-line is extended after the price in the same direction as long as the trend did not change their direction. After fracture tendencies indented in price movement to the right and begins to build in the opposite direction of the new line-Kaga, which in turn connects to place horizontal crosspiece with the previous line.
Rule of construction
In Kagi charts the changes in the schedule shall be made every time the price goes beyond the already drawn line (in the direction of the trend), or pass a set distance in the opposite direction. Before plotting are discussed:
The benchmark price - on the basis of what the price is plotted. Usually only use the closing price of the selected timeframe (for example, closing hours). Sometimes, based on the highs and lows - in this case take into account the maximum uphill, but at least - when moving down.
The value of the threshold parameter reversal (English reversal amount.) - The distance that must pass price in the opposite direction from the previous recorded values in the graph, there was a change of direction to Kagi line (beginning of a new vertical line). Usually installed in (the higher the stock price, the more it is recommended to take a value) or as a percentage of the current price (for example, 4%).
If the next price continues to move in the direction of the former vertical Kagi line, the line will be extended. For example, the maximum value of the previous growing Kagi line was 1.48 (point stop lines maximum). The new value of 1.4820 requires an increase in the line to a new level (a new high). If the next price moves in the opposite direction - nothing shows up until it will not pass the threshold distance. For example, a line was drawn to the level of 1.4820, after which she went down to 1.4801. At the threshold of 20, nothing will happen - the maximum Kagi line will remain at 1.4820. If the price drops below, then you need to back off a little to the right to draw from the previous high (1.4820) short horizontal segment (always of equal length) and from this level to start building down (in the opposite direction), a new Kagi line-up to the current level of prices. Now, to turn up the need to increase the price not less than the threshold value.In addition, Kaga-line can change its thickness (sometimes display color). If thin-Kagi line exceeds the previous high (maximum line current to the left) - the line becomes thicker. If thick-Kagi line falls below the previous low, then the line gets thinner.
There is a poetic interpretation of the chart in terms of yin and yang:
Yang - thick line
Yin - the thin line
Shoulder - Connect line growth with the fall line
Waist - connection line with falling growth lineWhen Yin is greater than the previous shoulder, there is a transformation in the Yang. If Yang is below the previous waist, is addressed in the Yin.Any of the vertical lines may contain an undetermined length of time. If the price fluctuated in the range, did not grow and did not fall in the value of the threshold, the chart all the time will remain unchanged.
Analysis Features
Kagi Chart was created to visualize the definition of the main trend. This type of schedule is effective in identifying key support and resistance levels. This view does not reflect minor price fluctuations that allows you to focus on the really important movements.There are three basic approaches to the analysis on the chart Kagi:
- buy at the beginning of a thick line (Yang), sell at the beginning of the thin line (Yin)
- notes the support and resistance lines
- after a series of 8-10 consecutive shoulders or waists expect a trend reversalThe sequence of thick lines indicates upward trend. The sequence of fine lines - the tendency to fall. The alternation of thick and thin lines indicates the equilibrium state of the market.Kagi built on the basis of prices of the selected timeframe. Typically, a closing price, and the highs and lows are ignored. Therefore, when they are created from data from different periods, the outcome might be different. The larger the scale on which a graph Kagi, the greater the probability that the outcome will significantly deviate from the schedule, created in real time. The most detailed schedule will be based on the tick (each fixed price changes) or minute data. Very close to the teak is an option, when the schedule is built on the basis of price highs / lows, rather than closing prices. However, deteriorating ability to schedule averaging trend may appear too many false signals.The graph Kagi not allocated minima and maxima of the individual intervals. No time reference. According to this indicator, based on a comparison of the prices of opening, closing, minima and maxima, fixed length of time may give conflicting signals.As the chart Kagi no volume, the indicators of the volume will not work.
History
As in the Japanese language - the name of the tool for cutting wood, which looks like the Latin letter L.
It is believed that the Kagi charts were created around 1870, during the birth of the Japanese stock market.
In Europe and the United States Kagi charts became known after the publication of the 1994 book by Steve Nison "Beyond candlesticks" (eng. Beyond Candlesticks)
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