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 more than 100 years of history and part of the body of knowledge of the CMT, are applied for the first time to on-chain indicators to conduct 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) Japanese Charting Methods:
During ancient times in Japan, price representations were hand-drawn. Traders had to represent the price of a commodity (rice at that time) accurately and precisely to make decisions with real consequences; errors meant financial losses. Strategies related to rice and market factors of that time were also utilized. All this began at the Dōjima Rice Exchange in Osaka, considered one of the first organized futures markets in history.
The first person who is said to have performed 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 be used in Japan for a long time before being shared with the Western world, as they were considered confidential. Only in 1986 was the first book on the subject published in English: “The Japanese Chart of Charts” by Seiki Shimizu, translated by Gregory S. Nicholson, meaning this body of knowledge has formally existed in the West for just 40 years.
Shortly after, Steve Nison, one of the first to receive the CMT designation, positioned 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 earlier in line format. He himself compared Japanese candlesticks to 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 - two-dimensional: time and value), Heikin-Ashi smooths out price noise making trends/reversals more visible, and Renko (one-dimensional) completely removes time from the equation focusing only on value changes. Each of these methods contributes a different type of visual analysis of the market, and you will see them applied to on-chain market indicators of Bitcoin.
It should be noted that there are others besides the three I mentioned.
2) CMT Association.
The CMT is a professional nonprofit organization that certifies technical market analysts globally. It is the highest institutional authority on the discipline, considered the highest standard in the field.
All 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, starting from informal meetings of technical analysts that began in New York in 1967. Over the following decades, Acampora and the association worked to legitimize the discipline, a goal they finally achieved by obtaining recognition from FINRA and the SEC (U.S.).
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 linked 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 the price, supply, demand, and holders of Bitcoin.
• 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) Holdings of Funds (Wall Street ETFs), 5) Realized Price UTXO (1s-1m), and 6) Realized Price UTXO (1m-3m), showcasing them with 3 methods of Japanese charting: 1) Renko, 2) Traditional Candles, and 3) Heikin-Ashi Inspired Candles.
• Most of these indicators are commonly represented in line or area format in the same color and on a daily timeframe.
• All price values noted in yellow correspond to the market price of Bitcoin (closes or highs), they are NOT values of the indicators. Specifically, what you are about to see are price annotations over on-chain market indicators, to conduct a complete analysis of BTC.
• This work is public and auditable.
• I learned to develop my own charts with the assistance of Claude and I use the CryptoQuant database.
• Lastly, beyond the charts presented, I show different types of analyses I conducted in English on CQ combining price action and on-chain indicators.
1) 1st Realized Price UTXO. Renko.
These are smoothed average prices with on-chain data derived from the gross market price. They can be comparable to traditional moving averages (SMA50).
Market history, 2020-2026.
This is how the price of Bitcoin looks when analyzed with on-chain data and Renko, filtering out market noise to see the prevailing trend:
This is how the normal market price of Bitcoin looks with Japanese candles, during the same period, without filtering the noise with on-chain data and Renko:
Market history, 2024-2026.
This is how the price of Bitcoin looks when analyzed with on-chain data and Renko, filtering the market noise to see the prevailing trend:
This is how the normal market price of Bitcoin looks with Japanese candles, during the same period, without filtering the noise with on-chain data and Renko:
2) NUPL - Net Unrealized Profit/Loss of Holders. Renko.
The NUPL measures how much unrealized (unsold) accumulated profit or loss holders of Bitcoin have.
Market history, 2020-2026:
3) Apparent Demand Growth. Traditional Candles.
This is an on-chain indicator that estimates the demand for Bitcoin in the market.
Market history, 2025-2026:
4) Holdings of Funds (Wall Street ETFs). Traditional Candles.
Amount of BTC held by Bitcoin ETFs listed on Wall Street.
Market history, 2025-2026:
5) 2nd Realized Price UTXO. Heikin-Ashi Inspired Candles.
Market history, 2024-2026.
This is how the market price of Bitcoin looks smoothed with on-chain data and Heikin-Ashi inspired candles to see the prevailing trend:
This is how the normal market price of Bitcoin looks with traditional candles, during the same period, without being smoothed by on-chain data and Heikin-Ashi inspired candles:
6) 3rd Realized Price UTXO. Heikin-Ashi Inspired Candles.
Market history, 2020-2026.
This is how the market price of Bitcoin looks smoothed with on-chain data and Heikin-Ashi inspired candles to see the prevailing trend:
This is how the normal market price of Bitcoin looks with traditional candles, during the same period, without being smoothed by on-chain data and Heikin-Ashi inspired candles:
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 BTC Halvings (bands set with the same deviation - 2.1), Anchored VWAPs of the ATHs from 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 the STH, and UPR of New and Old Whales.
8) On the other hand, I present 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 consult 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 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 reference different types of links related to the CMT and to authors who 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 31 reference links, more than 30 developed charts, and various types of market analysis on BTC and ETH, combining: price action, on-chain data, and derivatives. It includes the history of Traditional Candles, Heikin-Ashi, Renko, Anchored VWAP, and Realized Price. It can be translated into Spanish there.
https://cryptoquant.com/community/dashboard/69706233a662164c84864d2c
• In another sense, I emphasize that each reader must decide whether it is worth investing in Bitcoin or another asset in the short, medium, or long term, should they consider them undervalued. What I present is not an investment recommendation; each individual must conduct their own research and reach their own conclusions. Always invest prudently, with buying and selling strategies. Investments here are highly volatile and high-risk.
The biggest mistake one can make in this market is to be impatient and let oneself be carried away by greed or panic.
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