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 CMT, are applied for the first time to on-chain indicators to perform 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:
During ancient times in Japan, price representations were drawn by hand. Traders had to accurately represent the price of a commodity (rice at that time) to make decisions with real consequences, as mistakes could lead to financial losses. Strategies related to rice and market factors of that 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, performed this type of analysis was Munehisa Homma. He is attributed with writings from the 18th century about 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. 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 that this body of knowledge has formally existed in the West for only 40 years.
Shortly after, Steve Nison, one of the first to receive the CMT designation, became a key figure in the introduction and formalization of charting in the West, specifically on Wall Street, starting in 1991. He has written 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.
Prior to Nison, prices were represented in bar format and previously in line format. He compared Japanese candlesticks to these formats as color TVs vs. black and white TVs.
In this sense, it is important to understand that charting enhances the visual analysis of market data. For example, traditional candles 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 (one-dimensional) completely removes time from the equation, focusing only on value changes. Each of these methods provides a different type of visual market analysis, and they will be applied to Bitcoin’s on-chain market indicators.
It should be noted that there are others besides these three I mentioned.
2) CMT Association.
The CMT is a global non-profit professional organization that certifies market technical analysts. It is the highest institutional authority on the discipline and is 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, stemming 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 comprehensive 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 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 show them with 3 Japanese charting methods: 1) Renko, 2) traditional candles, and 3) Heikin-Ashi inspired candles.
• Most of these indicators are commonly represented in line or area format of the same color and on a daily timeframe.
• All price values shown in yellow correspond to the market price of Bitcoin (closes or highs), NOT indicator values. Specifically, what you will see are price annotations on top of on-chain market indicators, to enable a complete analysis of BTC.
• This work is public and auditable.
• I learned to develop my own charts with the assistance of Claude and use the CryptoQuant database.
• Finally, beyond the charts presented, I show different types of analyses I conducted in English in CQ combining price action and on-chain indicators.
1) 1st Realized Price UTXO. Renko.
These are smoothed average prices using 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 out 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 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 out the noise with on-chain data and Renko:
2) NUPL - Net Unrealized Profit/Loss of Holders. Renko.
NUPL measures how much unrealized accumulated profit or loss (without selling) Bitcoin holders 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) Fund Holdings (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 normal 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 normal 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 the on-chain indicators with the methods of Japanese charting.
A) I compared the Bitcoin market cycle from 2020-2022 vs. 2024-2026.
I used: Anchored VWAPs from the Third and Fourth BTC Halving (bands configured with the same deviation - 2.1), Anchored VWAPs from 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 LTHs and STHs.
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 STHs, and UPR of New and Old Whales.
8) On the other hand, I present observations derived from 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 analyses that I conducted in the same month, demonstrating 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 in CryptoQuant, which contains 32 reference links, more than 30 developed charts, and different 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 right there.
https://cryptoquant.com/community/dashboard/69706233a662164c84864d2c
• In another order, I emphasize that each reader must decide whether it is worth investing in Bitcoin or another asset in the short, medium, or long term if they consider them undervalued. What is presented here is not an investment recommendation; each one must conduct their own research and reach their own conclusions. Always invest prudently, with buying and selling strategies. 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 driven by greed or panic.
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