A line that turns when price moves far enough

Kagi Ashi connects vertical price movements with short horizontal turns. A line extends when the selected price makes a new extreme in its current direction. A small movement against that direction can leave the drawing unchanged. Once the reversal threshold is reached, the chart moves to a new column and draws a line in the opposite direction.

01 · BUILD THE LINE FROM PRICES

Compare ordinary closes with Kagi Ashi

Original illustration using invented prices, not historical market data.

The source chart contains seventeen completed periods. The Kagi Ashi chart contains five directional legs. Price moves from 100 to 106 in the first column. The close of 105 is only one unit below the latest extreme, so it does not create a new line. The next close of 104 completes a two unit reversal from 106.

Notice that an ignored close and the drawn endpoint can differ. At period 4, the actual close is 105 while the Kagi Ashi endpoint remains 106. The line is a filtered record of the selected prices, not a display of every current quote.

02 · EXTEND, WAIT OR TURN

Measure from the latest extreme

Original illustration using invented prices, not historical market data.

Starting from an upward line ending at 106, a new close of 107 extends the same column. A close of 105 leaves it unchanged. A close of 104 confirms the reversal and draws a horizontal connector at 106, followed by a downward line to 104.

If the line had first extended to 107, its new downward reversal threshold would be 105. Always recalculate from the latest drawn extreme. The horizontal connector marks a turn in the construction; it does not mean price stayed at that level for a fixed duration.

03 · SEPARATE DIRECTION FROM LINE STATE

Read shoulders, waists, Yin and Yang

Original illustration using invented prices, not historical market data.

A shoulder is the upper turning level where an upward leg becomes a downward leg. A waist is the lower turning level where a downward leg becomes an upward leg. In our example, the first shoulder is 106 and the first waist is 102.

For the conventional thickness rule used here, a thin Yin line becomes thick Yang when price moves above the previous shoulder. A thick Yang line becomes thin Yin when price moves below the previous waist. Touching a previous level is not a break in this illustration.

When the third leg rises beyond 106 to 107, its upper portion becomes thick. The next reversal down to 105 stays thick because the previous waist of 102 has not been broken. The subsequent move to 101 crosses that waist and changes the lower portion to thin. A later rise above the shoulder of 107 becomes thick again.

Compare successive shoulders and waists to describe structure. Higher shoulders and higher waists show progress upward in the filtered sequence. Breaks of one or several prior levels are observations to investigate, rather than automatic evidence of a profitable trade.

04 · YOUR SETTINGS CHANGE THE DRAWING

Compare reversal amounts on the same data

Original illustration using invented prices, not historical market data.

For this comparison, append three closes of 107, 108 and 106 to the earlier sequence. A smaller amount admits more turns. A larger amount ignores more movement and requires a larger retracement to confirm a reversal. The clean appearance comes with a tradeoff: price must already have moved before that reversal is drawn.

For a percentage example measured from the latest extreme, 2% of a high at 150 is 3, giving a downward threshold of 147. A 2% rise from a low at 100 is 2, giving an upward threshold of 102. Percentage rules and ATR handling should be checked against your platform’s documentation.

The horizontal axis does not represent equal time intervals. However, the source interval still matters. Hourly closes can omit movements that appear in tick data or shorter intervals. A developing line can also change before its source period closes.

05 · RECOVER THE CONTEXT

Kagi Ashi and Renko Ashi filter price differently

Conceptual comparison of three chart types.

Kagi Ashi uses lines with variable lengths and a chosen reversal amount. Renko Ashi uses bricks of a chosen size. In the classic Renko Ashi example on this site, a reversal requires two box sizes. Setting both charts to the number 2 therefore does not produce equivalent turning points.

Keep an ordinary chart alongside Kagi Ashi to check actual prices, elapsed time and intraperiod extremes. Closely spaced reversals can still occur in a range. Inspect the source data and your order assumptions when testing a strategy, rather than treating the compressed chart as a complete record of executable prices.

Try a controlled chart comparison

Save the instrument, source interval, price source, reversal method, amount and starting point. Compare two amounts on the same history. Mark each confirmed shoulder and waist, then check how much price had already moved when the turn became visible.

Continue with Renko Ashi or return to Knowledge.