Kagi charts are price charts with thick and thin vertical lines connected by short horizontal lines. Just like P&F charts, Kagi charts only add a new vertical line when prices have reversed enough to cancel the current uptrend or downtrend. Until such a reversal occurs, a Kagi chart will only move up (or down) in its current column. Kagi charts do not have constantly spaced time axes. Example of Kagi Chart is as shown above.
The thickness of the Kagi line changes depending on price action. The thick line is called the yang line and the thin line is called the yin line. The locations where the line changed from moving higher to moving lower are called "shoulders" and the locations where the line changed from moving lower to moving higher are called "waists". Whenever a yin (thin) line moves above the previous shoulder, it turns into a yang (thick) line. Similarly, whenever a yang line moves below the previous waist, it turns into a yin line.
The Kagi line will continue to move up (or down) until prices reverse by a specified amount. When that happens, a short horizontal line is added as well as a new vertical line which extends to the new closing price.
When the Kagi line goes from thin to thick, prices have just exceeded their previous important high - that's a bullish signal. The opposite is also true. When the Kagi line goes from thick to thin, prices have just fallen below their previous low, not a good sign for things to come.
Standard support/resistance, trend and chart pattern analysis techniques can also be used with Kagi charts. In fact it is often easier to locate strong support or resistance levels on Kagi charts because of their "clean" appearance.