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KAGI CHARTS for Amibroker (AFL)

1 / 5 (Votes 1)

Kagi Chart Interpretation

Kagi charts are an excellent way of viewing the underlying supply and demand of a market. When the most recent kagi line is thick (and GREEN), it indicates that demand is exceeding supply, and that the market is in an upward trend. Thin (RED) lines, on the other hand, show that supply is exceeding demand and that the market is in a downward trend.

Alternating thick and thin lines indicate that supply and demand are in an approximate state of balance.

Kagi charts take the ‘noise’ out of the market, giving you a chart of the market’s overall moves. You can gauge the strength of a trend by noting whether or not, in an upward trending market, a swing bottom is above, equal to, or below the previous swing top. The more ‘above’ it is, the stronger the trend.

Normal technical analysis techniques can be used very effectively. The following chart shows how effective trend lines can be when applied to kagi charts.
Note also the strong sell signal when the market broke below two swing bottoms.

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1 Comments

1. colion

Usually, the chart color is kept constant until a reversal above/below a shoulder >= threshold. You might want to consider this coloring scheme as it makes identifying trends easier.

In addition, it is probably worthwhile to include the option to specify the threshold not only in terms of percentage but also in terms of points and ATR().

You can view the coloring scheme and threshold options at a number of websites, including stockcharts.com.

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