What is a Kagi Chart?
Quick Answer: A Kagi chart is a time-independent price chart that changes direction only when price reverses by a set amount, filtering noise and signaling sentiment shifts.
Understanding Kagi Charts
Kagi charts display price movements independent of time, focusing on reversals of a predefined size. They produce alternating thick (yang) and thin (yin) lines to signal market sentiment shifts.
How They Work
A new Kagi line forms when price reverses by the box size. When price exceeds prior highs, the line thickens (bullish); when it falls below prior lows, it thins (bearish). Traders adjust box size to match volatility.
Noise Reduction
Kagi charts filter intraday noise, making them useful for identifying swing trends and breakout levels without distractions from time-based fluctuations.
Limitations
Because they ignore time, Kagi charts may lag real-time developments. Combine them with standard candlesticks and order-flow cues for execution.
Parameter Sensitivity
Choosing an inappropriate box size results in either excessive noise or overly smoothed signals. Backtest to find settings that match your strategy.
Related Terms
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