Figure 42.1 , Kagi Chart , Supply and Demand

A Kagi chart strips time entirely from the visual encoding and instead plots price direction and magnitude as the only two channels. The horizontal axis is not a time scale , it advances only when the price reverses by at least the pre-determined threshold. This makes the chart exploit position on a common scale (Y-axis price) and line weight (thick vs thin) as its two primary encodings, eliminating the visual noise of minor day-to-day fluctuations that obscure trend structure on time-series charts.

Starting from the first closing price, the line moves vertically in the current direction of price movement, extending as long as price continues in that direction by any amount. Once price reverses by at least the reversal amount (typically a percentage of the current price), the line draws a horizontal connector and begins extending in the new direction. Each horizontal connector is either a shoulder (peak reversal , price was rising, now falling) or a waist (trough reversal , price was falling, now rising).

The message is supply/demand balance over a sequence of price observations . A candlestick chart would show every session as a separate mark, burying the trend under daily noise. A line chart would show time-indexed prices but make it hard to identify reversal structure. The Kagi chart was built specifically to answer the question: "is the dominant force currently demand (Yang) or supply (Yin), and when did that change?" No other chart type answers that question as directly.

A Candlestick Chart , the nearest alternative , shows OHLC data for every session. It is far more data-rich but far more noisy. A trader reading a Kagi chart for trend signals would be overwhelmed by individual session volatility on a candlestick chart for the same period. The Kagi's deliberate suppression of minor moves is not a limitation , it is the feature. The reversal threshold is the tuning dial: lower it for more sensitivity, raise it for stronger noise filtering.

The reversal threshold is implemented as a percentage of the current price , not a fixed absolute value. A fixed-point reversal on an asset that moves from $50 to $200 would produce dramatically different chart density at different price levels. A percentage-based threshold maintains consistent visual density across the full price range of the data, which is why it is the standard implementation for modern Kagi charting.

Framework , FT Visual Vocabulary FT Visual Vocabulary category: Change over time / Patterns , revealing directional structure in sequential data by filtering noise. Abela quadrant: Comparison (comparing demand vs supply state across a price history). Tufte principle: every mark carries information , the horizontal connectors are data (reversal events), the line weight is data (Yang/Yin state); there is no decorative ink.

Paste this into Claude Code to generate a working version of this chart, plus its data file. The result will not be a perfect replica , the goal is that the reader can run the prompt, get a chart of this type, and read its source. Generate a complete, self-contained kagi chart in D3 v7. Two files:

The ideas in this chapter didn't appear from nowhere. Steve Nison introduced the Western trading world to Japanese charting methods , including kagi, renko, and candlestick charts , in his 1991 book Japanese Candlestick Charting Techniques. The book opened a centuries-old chart tradition to a new audience. Steve Nison, circa 1991. AI-generated portrait based on a public domain photograph (Wikimedia Commons).

The ideas in this chapter didn't appear from nowhere. Steve Nison introduced the Western trading world to Japanese charting methods , including kagi, renko, and candlestick charts , in his 1991 book Japanese Candlestick Charting Techniques. The book opened a centuries-old chart tradition to a new audience. Steve Nison, circa 1991. AI-generated portrait based on a public domain photograph (Wikimedia Commons).