Methods of Japanese Charting + On-Chain Indicators.
A) Introduction.
B) History.
C) New way to analyze Bitcoin.
D) Final Clarifications.
A) Introduction.
In this note, I show, through empirical examples, how the methods of Japanese charting, with over 100 years of history and part of the body of knowledge of CMT, are applied for the first time to on-chain indicators for market analysis on Bitcoin.
The gross price was the main type of data to which these methods were applied. Today, in Bitcoin (the first digital commodity in history), the range of possibilities is much larger, allowing these methods to be applied to a broader set of organic market data (on-chain indicators) beyond the gross price.
B) History.
1) Methods of Japanese Charting:
In ancient times, in Japan, price representations were hand-drawn. Traders had to accurately and precisely represent the price of a commodity (rice, at that time) in order to make decisions with real consequences; errors could result in financial losses. Strategies linked to rice and market factors of the time were also used. All of this began at the Dōjima Rice Exchange in Osaka, considered one of the first organized futures markets in history.
The first person who, it is said, conducted this type of analysis was Munehisa Homma. He is credited with writings from the 18th century on market psychology, considered among the first works on the subject. He later became a financial advisor to the Japanese government and was honored with the title of samurai for his contributions.
These methods continued to develop and were used in Japan for a long time before being shared with the Western world, as they were considered confidential. It was only in 1986 that the first book on the subject was published in English: “The Japanese Chart of Charts” by Seiki Shimizu, translated by Gregory S. Nicholson, meaning this body of knowledge has existed formally in the West for only 40 years.
Shortly after, Steve Nison, who was one of the first to receive the CMT designation, established himself as a key figure in the introduction and formalization of charting in the West, specifically on Wall Street, starting in 1991. He wrote several books, including the widely known “Japanese Candlestick Charting Techniques.” He is also a technical analysis expert with over 30 years of practical experience. Steve's client list includes Fidelity, J.P. Morgan, Goldman Sachs, and Morgan Stanley. Additionally, his work has been featured in The Wall Street Journal, Worth Magazine, Institutional Investor, and Barron’s.
Before Nison, prices were represented in bar format and previously in lines. He himself compared Japanese candlesticks with these formats as color TV vs. black and white TV.
In this sense, it is important to understand that charting improves the visual analysis of market data. For example, traditional candlesticks show the internal structure of each period with body/wicks (OHLC - bidimensional: time and value), Heikin-Ashi smooths out price noise, making trends/reversals more visible, and Renko (unidimensional) completely removes time from the equation, focusing only on changes in values. Each of these methods provides a different type of visual market analysis, and you will see them applied to Bitcoin's on-chain market indicators.
It should be clarified that there are others besides these three that I mentioned.
2) CMT Association.
The CMT is a professional non-profit organization that certifies technical market analysts globally. It is the highest institutional authority on the discipline, considered the highest standard in the field.
All the trading material shared in this note comes from authors whose work has been evaluated and promoted by the CMT.
The association was founded in 1973 by Ralph Acampora, John Brooks, and John Greeley, stemming from informal meetings of technical analysts that began in New York in 1967. During the following decades, Acampora and the association worked to legitimize the discipline, a goal they eventually achieved by obtaining recognition from FINRA and the SEC (USA).
Although they promoted pure technical analysis, Acampora himself supports what is called "fusion analysis," the integration of technical and fundamental approaches, as the most complete way to analyze markets. In the Bitcoin ecosystem, its on-chain data is interpreted by the industry as fundamental data, and Japanese charting is directly related to technical analysis, so what I will show in the following analyses is a type of "fusion analysis" on Bitcoin.
C) New way to analyze Bitcoin.
Technical considerations:
• The analyses will focus on price, supply, demand, and Bitcoin holders.
• I selected 6 on-chain indicators: 1) Realized Price UTXO (1d-1s), 2) NUPL - Net Unrealized Profit/Loss of Holders, 3) Apparent Demand Growth, 4) Fund Holdings (Wall Street ETFs), 5) Realized Price UTXO (1s-1m), and 6) Realized Price UTXO (1m-3m), and I present them with 3 methods of Japanese charting: 1) Renko, 2) Traditional Candlesticks, and 3) Heikin-Ashi Inspired Candlesticks.
• Most of these indicators are commonly represented in line or area format of the same color and on a daily basis.
• All the price values noted in yellow correspond to Bitcoin's market price (closes or highs), NOT values of the indicators. Specifically, what you will see are price annotations above the on-chain market indicators, allowing for a complete BTC analysis.
• The present work is public and auditable.
• I learned to develop my own charts with assistance from Claude and use the CryptoQuant database.
• Lastly, beyond the presented charts, I show different types of analyses that I conducted in English on CQ, combining price action and on-chain indicators.
1) 1st Realized Price UTXO. Renko.
These are average prices smoothed with on-chain data derived from the market's gross price. They can be comparable to traditional moving averages (SMA50).
Market history, 2020-2026.
This is how Bitcoin's price looks when analyzing it with on-chain data and Renko, filtering out market noise to see the prevailing trend:
This is how Bitcoin's market price looks normal with Japanese candlesticks, during the same period, without having filtered the noise with on-chain data and Renko:
Market history, 2024-2026.
This is how Bitcoin's price looks when analyzing it with on-chain data and Renko, filtering out market noise to see the prevailing trend:
This is how Bitcoin's market price looks normal with Japanese candlesticks, during the same period, without having filtered the noise with on-chain data and Renko:
2) NUPL - Net Unrealized Profit/Loss of Holders. Renko.
The NUPL measures how much unrealized (not sold) accumulated profit or loss Bitcoin holders have.
Market history, 2020-2026:
3) Growth of Apparent Demand. Traditional Candlesticks.
This is an on-chain indicator that estimates the demand for Bitcoin in the market.
Market history, 2025-2026:
4) Fund Holdings (Wall Street ETFs). Traditional Candlesticks.
Amount of BTC held by Bitcoin ETFs listed on Wall Street.
Market history, 2025-2026:
5) 2nd Realized Price UTXO. Heikin-Ashi Inspired Candlesticks.
Market history, 2024-2026.
This is how Bitcoin's market price looks smoothed with on-chain data and Heikin-Ashi inspired candlesticks to see the prevailing trend:
This is how Bitcoin's market price looks normal with traditional candlesticks, during the same period, without being smoothed by on-chain data and Heikin-Ashi inspired candlesticks:
6) 3rd Realized Price UTXO. Heikin-Ashi Inspired Candlesticks.
Market history, 2020-2026.
This is how Bitcoin's market price looks smoothed with on-chain data and Heikin-Ashi inspired candlesticks to see the prevailing trend:
This is how Bitcoin's market price looks normal with traditional candlesticks, during the same period, without being smoothed by on-chain data and Heikin-Ashi inspired candlesticks:
7) Examples of 2 analyses in English that I conducted before combining on-chain indicators with Japanese charting methods.
A) I compared the Bitcoin market cycle from 2020-2022 vs 2024-2026.
I used: Anchored VWAPs from the Third and Fourth Halving of BTC (bands set with the same deviation - 2.1), Anchored VWAPs of the ATHs of 2021 and 2025, SMA50 (weekly timeframe), Realized Loss - USD, NUPL, Supply in Loss, UPR of New and Old Whales, UPR of Mining Whales, NUPL of LTH and STH.
B) I compared the 3 market drops to see which was the most painful for Bitcoin holders.
I used: Realized Loss - USD, Supply in Loss, NUPL, NUPL of STH, and UPR of New and Old Whales.
8) On the other hand, I present the observations derived from the on-chain indicators incorporated chronologically (not all are in this article; if you want to see the rest, I invite you to check the technical dashboard that I share at the end of the note). This section was added in June 2026 to continue with images 7 A and B:
9) Finally, I show some analyses that I conducted the same month, showing the correlation between on-chain indicators and market price.
Lower Demand, Lower Price, More Supply in Loss:
D) Final Clarifications.
• I provide references to different types of links related to the CMT and authors who have delved into Japanese charting and other professional trading techniques:
https://cmtassociation.org/association/history/
https://cmtassociation.org/presenter/steve-nison/
https://cmtassociation.org/presenter/dan-valcu/
https://cmtassociation.org/presenter/brian-shannon/
https://cmtassociation.org/presenter/prashant-shah/
• If you are interested in learning more about this topic, I invite you to explore the technical dashboard I built on CryptoQuant, which contains 32 reference links, over 30 developed charts, and various types of market analyses on BTC and ETH, combining: price action, on-chain data, and derivatives. It includes the history of Traditional Candlesticks, Heikin-Ashi, Renko, Anchored VWAP, and Realized Price. It can be translated into Spanish right there.
https://cryptoquant.com/community/dashboard/69706233a662164c84864d2c
• Furthermore, I emphasize that each reader must decide whether it is worthwhile to invest in Bitcoin or another asset in the short, medium, or long term, in case the
Consider them underestimated. What is present here is not an investment recommendation; everyone must conduct their own research and arrive at their own conclusions. One should always invest prudently, with buying and selling strategies. The investments here are very volatile and high-risk.
The worst mistake that can be made in this market is to be impatient and let oneself be carried away by greed or panic.
Comments