Methods of Japanese Charting + On-Chain Market 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 market indicators to conduct analysis on Bitcoin.
The gross price was the primary 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.
It is not necessary to be technical to understand the analyses that will be shown.
B) History.
1) Methods of Japanese Charting:
During ancient times in Japan, price representations were drawn by hand. Traders had to accurately and correctly represent the price of a commodity (rice, at that time) to make decisions with real consequences; mistakes led to financial losses. Strategies linked to rice and market factors of that time were also utilized. This all began at the Dōjima Rice Exchange in Osaka, considered one of the first organized futures markets in history.
The first person to have reportedly done 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 be developed and used in Japan for a long time before being shared with the Western world, as they were considered confidential. It was not until 1986 that the first book on the topic in English, “The Japanese Chart of Charts” by Seiki Shimizu, translated by Gregory S. Nicholson, was published. Thus, 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, 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 an expert in technical analysis with over 30 years of practical experience. Steve's client list includes Fidelity, J.P. Morgan, Goldman Sachs, and Morgan Stanley. In addition, his work has been featured in The Wall Street Journal, Worth Magazine, Institutional Investor, and Barron’s.
Prior to Nison, price was represented in bar format and previously in line format. He himself compared Japanese candles with 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 candles 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 eliminates time from the equation, focusing solely on value changes. Each of these methods provides a different type of visual market analysis, and you will see them applied to on-chain market indicators of Bitcoin.
There are other methods beyond 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 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, arising 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 finally achieved by obtaining 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 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. Thus, what I will show in the following analyses is a type of "fusion analysis" on Bitcoin.
C) New way to analyze Bitcoin.
Technical considerations:
• I selected 6 on-chain indicators: 1) Realized Price UTXO (1d-1s), 2) NUPL - Net Unrealized Profit/Loss of Holders, 3) Growth of Apparent Demand, 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 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 of the same color.
• On-chain data was extracted from the CryptoQuant platform.
• All price values seen highlighted 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 complete a full analysis of BTC.
• This work is public and auditable.
• Lastly, for illustrative purposes, I show what type of analysis combining price action and on-chain data I performed before I had the idea of mixing Japanese charting with indicators.
1) 1st Realized Price UTXO. Renko.
These are average prices smoothed 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 what the normal market price of Bitcoin looks like with Japanese candles during the same period, without noise being filtered with on-chain data and Renko:
Market history, 2024-2026:
This is what the normal market price of Bitcoin looks like with Japanese candles during the same period, without noise being filtered with on-chain data and Renko:
2) NUPL - Net Unrealized Profit/Loss of Holders. Renko.
The NUPL measures how much unrealized profit or loss (without selling) Bitcoin holders have.
Market history, 2020-2026:
3) Growth of Apparent Demand. 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 that trade 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 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 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 charting methods.
I compared the Bitcoin market cycle of 2020-2022 vs 2024-2026.
I used: Anchored VWAPs from the Third and Fourth Halvings of BTC (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 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 CMT and 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/
• Additionally, 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 I present is not an investment recommendation; everyone should conduct their own research and reach their own conclusions. Investments here are highly volatile and carry significant risk.
The worst mistake one can make in this market is to be impatient and let oneself be driven by greed or panic.
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