when the kagi chart reverses it draws a horizontal line at the low or high price close high or low depending on which is selected and then reverses it will continues to move vertically until there is a reversal 
these are directional changes on the chart the lines changing color or switching from thick to thin highlights when a prior kagi chart high or low is breached kagi chart trade signalsas discussed kagi chart signals are best used in conjunction with other forms of analysis that said kagi charts do have some unique trade signals based on their formations multiple kagi patterns are covered in the book beyond candlesticks by steve nison for the best outcomes kagi charts should be combined with other technical analysis tools such as sentiment indicators and moving averages example of how to use a kagi chartthe follow chart shows a kagi chart of apple based on 1 hour closing prices the reversal amount is 5 the chart shows examples of rising shoulders which highlight the price rising in an uptrend the series of falling waists signals the price is in an downtrend there are also three examples of the three buddha bottom highlighted which signaled buying opportunities as a general note the kagi switches to green when the price moves above the prior kagi high and switches to red when the price drops below the prior kagi low the difference between kagi charts and renko chartskagi and renko charts are both based on reversal amounts renko charts are created by bricks that only move at 45 degree angles and never occur beside each other each brick is a specified amount in order to get a reversal on the renko chart the price must move two brick distances since there are no side by side bricks the limitations of using kagi chartskagi charts are sensitive to their settings and with poor settings they can be as noisy as other charting methods once a good setting is found for a particular asset that setting may not work well on another asset the trader therefore may need to find kagi settings that work for each asset traded for some traders the trend may be harder to identify with the kagi charts with the line thickness or color changing as well as the chart itself moving up and down in vertical lines while trade signals with kagi charts will have some similarities to other chart types like candlesticks kagi charts have unique features which may require additional study to take advantage of many of the general buy and signals generated by kagi charts won t be profitable over many trades until combined with other forms of analysis to help filter trades 