Kagi Charts: Reversal Amount, Shoulders and Signals

The Kagi chart is the quietest of the charts without a time axis. It draws a single unbroken line that changes direction only when price turns against the current move by a fixed amount. Its real signal, though, is not the direction of the line but its thickness.

That is what sets it apart from Renko and point and figure. Measured on Germany’s DAX stock index (the Yahoo Finance cash index series, all amounts in index points) with a reversal amount of 100 points, the Kagi line turned eight times but changed its signal only four times. It shows a lot of movement and asks for little action. On this page I explain how the chart is built, how to choose the reversal amount and, in a direct comparison, when each of the three timeless chart types is the right one. This article follows our editorial policy.

Kagi charts in 30 seconds

• No time axis: the line moves only when price moves. When the market stands still, nothing happens on the chart.
• Reversal amount: the line turns only when price moves against the current direction by the set amount. Anything smaller is ignored.
• Shoulder and waist: a peak of the line is called a shoulder, a trough a waist. They are the reference points for every signal.
• Yang and yin: when the line breaks above the last shoulder it turns thick (yang, often green). When it falls below the last waist it turns thin (yin, often red). This change is the signal, not the direction.
• Few signals: in the DAX example on this page, eight reversals produced only four signal changes.
• Origin: the chart was developed in Japan in the late 19th century, in the same tradition of Japanese charting that gave us candlesticks.

What is a Kagi chart?

A Kagi chart is a price chart without a time axis that draws the price path as one continuous line of vertical and horizontal sections. The line changes direction only when price turns against the current move by a set reversal amount. Its thickness shows whether the last break was above a high or below a low.

The method is Japanese and dates back to the late 19th century. StockCharts’ ChartSchool, citing Steve Nison, places its invention in Japan in that period. Nison introduced Kagi charts to Western traders in his book Beyond Candlesticks, so they belong to the same family as candlestick charts. The exact meaning of the name is told in different ways, so I leave it at the fact that it is a Japanese word.

The practical difference to a line chart is the filter. A line chart connects the closing prices and twitches with every move. The Kagi chart ignores everything that stays below the reversal amount and only draws on when a real countermove happens. If you want the basics of reading a normal chart first, start with how to read candlestick charts.

How a Kagi chart is built

Two rules decide everything on a Kagi chart. The first one controls the movement of the line, the second one its thickness.

Shoulders and waists

As long as price keeps going in the current direction, the vertical line gets longer. When it turns by at least the reversal amount, a short horizontal section appears and the line continues in the other direction. A turning point stays behind at that spot.

These turning points have their own names: a peak is a shoulder, a trough is a waist. They are not decoration. They are the reference points at which every Kagi signal is decided. The chart shows them on the DAX with a reversal amount of 100 points.

Yang line and yin line

Here is the feature that makes the Kagi chart different from every other chart type. When the line rises above the last shoulder, it becomes thick. That is the yang line. When it falls below the last waist, it becomes thin. That is the yin line. Most platforms add color: green for yang and red for yin is a common default.

The line can therefore rise and still stay thin, as long as it does not pass the last shoulder. That is the filter: there are many changes of direction and few changes of signal. In the chart above, eight reversals stand against four switches between yang and yin. Each switch happens exactly at the broken shoulder or waist, which is why a single vertical line can be thin at the bottom and thick at the top.

Choosing the reversal amount

The reversal amount is the main setting of a Kagi chart. It works like the box size in point and figure or the brick size in Renko and decides how large a countermove must be before the line turns. The data interval behind the chart and the choice of closes or highs and lows also change the result, so keep them fixed when you compare settings.

There are three common ways to set it. A fixed amount in points, pips or cents, a percentage of the price, or the ATR as a value that adapts to volatility. The ATR has the advantage that the threshold narrows in calm phases and widens in hectic ones. How the ATR itself is calculated is explained in the guide on the ATR indicator.

The effect is clear in the numbers. With a reversal amount of 60 points the DAX line turned 18 times in the sample period, with 100 points 8 times and with 150 points only 6 times. The signal changes fell from 6 to 4 to 2. If you choose the amount too small, you get a restless chart and lose the advantage of the method. If you choose it too large, you see a reversal only when a good part of the move is already over.

A rule of thumb that has worked for me: set the reversal amount in the range of your own stop distance. Then the sensitivity of the chart matches the risk you carry on each trade anyway. More on stop distances that follow volatility is in the guide on the volatility stop-loss.

Kagi, Renko or point and figure?

All three charts work without a time axis, and all three filter market noise. Still, they are not interchangeable. The chart shows the same DAX data in all three forms, each with the same value of 25 points.

The numbers show how differently the three treat the same input. Renko draws by far the most elements, because every full brick gets its own column. Point and figure stacks boxes in one column as long as the direction holds and needs three boxes for a reversal. Kagi sits close to point and figure in the count, but it shows the state of the trend directly in the line thickness.

Chart type	Reversal	Elements in the example
Point and figure	Free to choose, usually 3 boxes	41 columns
Renko	Fixed by design: 2 bricks	93 bricks
Kagi	Free to choose via the amount	38 vertical lines (37 reversals)

DAX, 120 hourly bars from August 4 to 21, 2026, all three with a value of 25 points. Point and figure uses highs and lows, Renko and Kagi use closes.

This leads to a practical split. The Renko chart suits you if you want to see the trend as a staircase. The point and figure chart is strong at support and resistance and at measuring price targets. The Kagi chart plays its strength when the question is whether a trend is still intact, without treating every countermove as a signal.

How to read Kagi signals

The basic signal logic is short: two rules and one important consequence. It makes the chart interesting for trend followers. Traders who want to catch reversals early will find the basic signals late, although StockCharts describes further Kagi patterns for that purpose.

• Buy signal: the line rises above the last shoulder and changes from thin to thick. Only this change counts, not the upward move itself.
• Sell signal: the line falls below the last waist and changes from thick to thin.
• No signal: an upward move that stays below the last shoulder changes nothing. The line stays thin, even though price is rising.

The third rule is the most important one, and it is where most traders go wrong. If you buy on the first upward section, you have missed the principle: the thickness changes only when a previous extreme has been broken.

In practice, rising shoulders point to an intact uptrend and falling waists to a downtrend. If both stay at a similar height, the market is moving sideways, and the signals often alternate at short intervals. That is the situation in which the basic Kagi signals tend to cost the most money. How I handle such phases on a normal chart is shown in the guide on range trading.

Pros and cons of Kagi charts

Like every filter, the Kagi chart gains in one place what it loses in another. The two lists sum up what that means in practice for a trend follower.

Pros of Kagi charts

• Shows trend state in the line itself: the thickness tells you at a glance whether the last break was up or down, separately from the direction of the line. In the example, eight reversals stood against four line changes.
• Trend strength at a glance: rising shoulders and rising waists show an intact uptrend without drawing a single trendline.
• Very calm picture: one continuous line without gaps is quicker to take in than columns or bricks, especially over longer periods.
• One main setting: the reversal amount does most of the filtering. The data interval and the price field matter too, but they rarely need changing once chosen.

Cons of Kagi charts

• Late signals: the thickness changes only after a previous extreme has been broken. By then part of the move is over, often more than on a Renko chart.
• Weak in sideways markets: if shoulders and waists sit at a similar height, the line can switch back and forth quickly. Following every switch can lead to repeated whipsaws and trading costs.
• No OHLC data, filtered endpoint: like Renko and point and figure, the chart does not show the open, high, low and close of a period, and the end of the line can differ from the current market price. Check the live quote or a normal price chart before you place an order.
• Not widely used: there is little literature and few traders to discuss the method with. If you start with it, you mostly work on your own.

Where to get Kagi charts

Kagi is the rarest of the three timeless chart types and built into fewer platforms than Renko. These four offer it as a standard chart type (checked November 12, 2026).

• TradingView: Kagi is in the chart type menu. According to the TradingView help center, the line size can be set with the ATR (default length 14), as a fixed traditional value or as a percentage of the last price, which can repaint. More in my TradingView review.
• StockCharts.com: in SharpCharts, choose Kagi as the chart type under the chart attributes. The reversal can be set in points, as a percentage or with the ATR, and the price field can be the close or the high-low range. More in the StockCharts review.
• NinjaTrader: Kagi is a built-in bar type. The reversal is set in ticks or as a percentage, and the default colors switch from red to green once the last high is exceeded (NinjaTrader 8 help guide).
• TradeStation: the TradeStation help describes a Kagi chart with a reversal as a fixed price or a percentage.

MetaTrader is the notable gap. Neither MT4 nor MT5 offers Kagi as a standard chart type. There are indicators in the MQL5 market, but their quality varies a lot.

One setting is often overlooked: which prices the chart is built from. TradingView builds Kagi from closing prices, and that is also the usual default elsewhere. StockCharts lets you switch to the high-low range. That variant produces more reversals and earlier signal changes. Both are valid, as long as you stick to one of them.

Conclusion: who should use Kagi charts

The Kagi chart answers one single question, but it answers it very cleanly: is the trend still intact? As long as the line stays thick, the market has not broken a previous low. Everything else that happens in between is filtered out. For a trend follower that is exactly the right reduction.

That makes it a second opinion, not a rival to the candlestick chart. This is how I use this family of charts myself: the candlestick chart decides the entry, the timeless chart decides whether I look for trades in the direction of the trend at all. For the entry I use the normal chart, because the end of the Kagi line is a filtered value and can differ from the current price.

If you want to try it, start with a reversal amount close to your own stop distance and run the chart for two weeks next to your usual one. If the signal changes keep coming too late, that is not a flaw of the method. It means your own trading horizon is shorter than the one this chart was built for. Then the candlestick chart is the better choice.

Charts and numbers on this page are market analysis and education, not investment advice. The DAX example is one historical period and does not prove that Kagi signals will work in the future.

Frequently asked questions about Kagi charts

What is a Kagi chart?

A Kagi chart is a price chart without a time axis. It draws the price path as one continuous line of vertical and horizontal sections. The direction changes only when price turns against the current move by the set reversal amount.

Where do Kagi charts come from?

Kagi charts were developed in Japan in the late 19th century. Steve Nison introduced them to Western traders in his book Beyond Candlesticks. The exact meaning of the Japanese name is explained in different ways by different sources.

What do thick and thin lines mean on a Kagi chart?

The thick line is called the yang line and appears as soon as price rises above the last shoulder. The thin line is the yin line and appears as soon as price falls below the last waist. This switch is the actual signal, not the direction of the line.

What are shoulders and waists?

A peak of the Kagi line is called a shoulder, a trough a waist. Every signal is decided at these two points: breaking a shoulder makes the line thick, breaking a waist makes it thin.

How do I choose the reversal amount?

A fixed amount, a percentage of the price or the ATR are the usual choices. As a rule of thumb, a value close to your own stop distance has worked well. In the DAX example on this page, a 60-point amount produced 18 reversals, a 150-point amount only 6.

What is the difference between Kagi and Renko charts?

Both work without a time axis, but they are built differently. A Renko chart sets bricks of equal size diagonally and needs two brick heights for a reversal. A Kagi chart draws one continuous line with a freely chosen amount and shows the trend state through its thickness. On the same DAX data there were 93 Renko bricks against 37 Kagi reversals.

Which trading style suits Kagi charts?

It suits trend-following approaches best, for example with holding periods of several days. In sideways phases the line can switch back and forth at short intervals, and many of these switches turn out to be whipsaws. For short-term entries I use it only next to a normal price chart.