Steve Neeson, the father of candlestick charts, presents a more powerful charting technique.

Although the first person to devise the candlestick chart was the famous Japanese investor Munehisa Homma, the person who brought the tool out of the limited region of Japan was none other than the author of this book, Steve Neeson.
It is thanks to his hard work that we can now use candlestick charts as a technical analysis tool to predict market movements.
This time, he introduced another secret weapon that will further confirm the trading signals of candlestick charts.


These include the three-line reversal chart, Kagi chart, and Renko chart, which exclude the concept of time from the chart and only track new prices to clearly capture reversal points.
Here, the probability of chart signals being hit can be increased by adding a divergence that measures the strength of the market's buying and selling forces using a double moving average.

One of the greatest advantages of candlestick charts is that they can be easily integrated with other technical analysis methods.
...
Two key concepts that link volume and price movement are accumulation and distribution.
When there is a lot of trading volume at a low price range and the price moves sideways, this is called buying.
High volume at the low point means that sellers are waging an all-out war, mobilizing all available resources and weapons.
However, the fact that the price is moving sideways is evidence that the selling forces are unable to push the price down.
This is because the buying force is digesting all the selling volume put out by the selling force.
Eventually, the selling forces may run out of bullets or just give up.
Then the rally begins.
Diversification is the opposite of accumulation.
Dispersion means that there is a lot of trading volume at a high price point, but the price is essentially stagnant.
In this case, so-called smart money can be seen as meeting the demand of all buyers entering the market by supplying quantity.
As the distribution phase progresses, sellers release sufficient supply to satisfy all buyers' demand, thus maintaining the price.
Dispersion should be viewed as a downward reversal scenario. --- From PART 1 Candlestick Chart 'Acquisition and Dispersion'

While the three-line chart, Renko chart, and Kagi chart are different, they are powerful tools that should be in any trader's technical analysis arsenal.
The advantages of these charts can be summarized as follows:
1.
Support lines, resistance lines, and concentrated areas become more clearly visible.
2.
It captures important movements by filtering out abnormal price fluctuations.
3.
It shows the overall trend of the market more clearly.
4.
It provides a broader view of the market by compressing price movements and providing a longer-term outlook.
5.
It helps you decide when to liquidate your position.
Since candlestick charts typically don't provide target prices, the reversal signals these new techniques provide can be used to close out positions.
6.
It provides technical analysis tools that can be applied even to markets that only provide closing prices.
This is because these techniques can be utilized as long as you have the stock.
Therefore, it is possible to analyze the returns on financial products such as mutual funds and U.S. Treasury bonds. --- From the 'Introduction' of PART 2: Disparity and New Price Charts

In Chapter 4, we looked at the importance of trend monitoring when using candlestick charts.
Since the three-line conversion chart can be used to determine whether an upward or downward trend is occurring, it can be used as a supplementary tool along with candlestick charts.
The three-line chart is used as a compass to determine trends, and specific trading strategies are established based on the trading signals that appear on the candlestick chart.
For example, if there are three consecutive white lines, it is an uptrend.
In this case, a bullish candle signal can be seen as a buy signal, and a bearish candle signal that appears during an uptrend can be seen as a warning to cover short positions, i.e., to buy back short-sold stocks.
Since candlestick charts rarely provide target prices, rising or falling reversal lines can be used as signals to liquidate trades made based on candlestick chart signals. --- PART 2 Divergence and New Price Charts From 'Three-Line Reversal Chart and Candlestick Chart'

There are many ways to use the Kagi chart, but the most basic way is to buy when the Kagi line changes from a thin line to a thick line, and sell when the line changes from a thick line to a thin line.
Remember that the Kagi line thickens when the price breaks through the previous high.
When the price breaks through the previous low, the Kagi line changes into a thin line, or negative line.
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When a positive line appears, a buy signal is generated, and when it changes to a negative line, a sell signal is generated.
In a sideways movement, you may incur losses due to unnecessary frequent trading signals.
The reason is that, like the three-line conversion chart or the Renko chart, the Kagi chart is also a tool that indicates trends, and therefore, in a market without a trend, it can cause frequent market entries and exits.
There are a few ways to avoid this problem, one of which is adjusting the sensitivity.
However, the purpose of the Kagi chart is to identify long-term trends.

--- PART 2: Separation and New Price Charts 'Trading Techniques Using Kagi Charts'