Chapter 4. --- Renko and Kagi Chart

“ Many of life's failures are men who did not realize how close they were to success when they gave up ”

A. Renko Chart

The Renko chart is a trend following technique. It has acquired its name from a Japanese word "renga" meaning bricks.Renko charts is different from Three Line Break charts as here a line brick is drawn in the direction of the prior move only if prices move by a minimum amount which is equivalent to the box size that are always equal in size. Renko charts are always based on the closing prices. Renko bricks are drawn after comparing, that day’s close with the previous brick (high or low). A "box size" which determines the minimum price change to show is specified.

I cannot explain about how to construct renko chart because i try to as soon as possible to finish all of this materials, to construct the renko chart you can find it by searching in internet but usually in metastock you can use the renko chart without manually calculate anything. ^_^

This renko chart is easy to used, if you see the blue blick it mean buy and red blick mean sell, but you must need other indicator and technic to make sure you are in the right position to buy or sell.

B. Kagi Chart

Kagi chart comes from the ]apanese word "kagi," which was an old fashioned key that had an L-shaped head. This is the reason that kagi charts are also called key charts by some ]apanese.FF I he Kagi chart is thought to have been created around the time that the Japaneses tock market started trading in the 1870s.

The basic of the kagi chart is that the thickness and the directionof the kagi lines are dependent on the market's action. If the market continues to move in the direction of the prior kagi line, that line is extended. However, if the market reverses by a predetermined amount, a new kagi line is drawn in the next column in the opposite direction. An interesting aspect of the kagi chart is that when prices penetrate a prior low or high, the thickness of the kagi line changes. The thick kagi line is called a yang line and the thin kagi line is called a yin line.The short horizontal line on the kagi chart is labeled the inflection line.

The are many ways to use kagi charts, but the most basic is to buy when the kagi line goes from thin to thick, and to sell when the kagi line changes from thick to thin.