Japanese Chart Methods + On-Chain Market Indicators.
A) Introduction.
B) History.
C) New way of analyzing Bitcoin.
D) Final Clarifications.
A) Introduction.
In this note, I show, through empirical examples, how Japanese chart methods, with over 100 years of history and part of the body of knowledge of CMT, are applied for the first time to on-chain market indicators to conduct 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 broader, allowing these methods to be applied to a wider set of organic market data (on-chain market indicators) beyond the gross price.
No technical knowledge is required to understand the analyses that will be presented.
B) History.
1) Japanese Chart Methods:
In ancient times in Japan, price representations were hand-drawn. Traders had to accurately represent the price of a commodity (rice, at that time) to make decisions with real consequences; errors meant financial losses. Strategies linked to rice and market factors of that time were also used. 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 conducted this type of analysis was Munehisa Homma. He is attributed 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 only 40 years.
Shortly after, Steve Nison, who was one of the first to receive the CMT designation, emerged 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 highlighted in The Wall Street Journal, Worth Magazine, Institutional Investor, and Barron’s.
Prior to Nison, price was represented in bar format and earlier in lines. He compared Japanese candlesticks to these formats as color TV vs. black and white TV.
In this sense, it is important to understand that charting enhances 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 smoothens 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 you will see them applied to Bitcoin's on-chain market indicators.
It should be noted that there are other methods besides these three that I mentioned.
2) CMT Association.
The CMT is a non-profit professional 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, 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 gaining recognition from FINRA and the SEC (U.S.).
While 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 of analyzing Bitcoin.
Technical considerations:
• 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 using 3 Japanese chart 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.
• The on-chain data was extracted from the CryptoQuant platform.
• All price values that are 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 above the on-chain market indicators to allow for a complete analysis of BTC.
• This work is public and auditable.
• Lastly, for illustrative purposes, I show what kind of analysis I was doing by combining price action and on-chain data before I had the idea of mixing Japanese charting and the indicators.
1) 1st Realized Price UTXO. Renko.
These are smoothed average prices 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 what the price of Bitcoin looks like when analyzed with on-chain data and Renko, filtering market noise to see the prevailing trend:
This is what the normal market price of Bitcoin looks like with Japanese candles, during the same period, without filtering the noise with on-chain data and Renko:
Market history, 2024-2026.
This is what the price of Bitcoin looks like when analyzed with on-chain data and Renko, filtering market noise to see the prevailing trend:
This is what the normal market price of Bitcoin looks like 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.
NUPL measures how much unrealized (non-sold) accumulated profit or loss 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 what the normal market price of Bitcoin looks like smoothed with on-chain data and Heikin-Ashi inspired candles to see the prevailing trend:
This is what the normal market price of Bitcoin looks like 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 what the normal market price of Bitcoin looks like smoothed with on-chain data and Heikin-Ashi inspired candles to see the prevailing trend:
This is what the normal market price of Bitcoin looks like with traditional candles, during the same period, without being smoothed by on-chain data and Heikin-Ashi inspired candles:
7A) Examples of 2 analyses in English that I conducted before combining on-chain indicators with Japanese chart methods.
I compared the Bitcoin market cycle of 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 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 LTH and STH.
7B) 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.
D) Final Clarifications.
• I reference different types of links related to the CMT and to authors who have explored 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/
• In another note, 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; everyone must conduct their own research and arrive at their own conclusions. Always invest prudently, with buying and selling strategies. Investments here are very volatile and high-risk.
The worst mistake one can make in this market is to be impatient and succumb to greed or panic.
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