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Heikin Ashi Charts

Posted By: TradersLog

Heikin-Ashi, meaning average bar in Japanese is a form of charting used to help identify trends and trend changes.

Candlestick charts are normally composed of a series of open-high-low-close (OHLC) bars set apart by a time series.

The Heikin-Ashi technique uses a modified formula:

Close = (Open+High+Low+Close)/4
Open = [Open (previous bar) + Close (previous bar)]/2
High = Max (High,Open,Close)
Low = Min (Low,Open, Close)

Interpretation of Heikin Ashi Charts:

  • Hollow candles with no lower shadow/wick indicates a strong uptrend, hold existing long positions.
  • Hollow candles indicate an uptrend.
  • One candle with a small body surrounded by upper and lower shadows indicates a trend change or indecision.
  • Filled candles indicate a downtrend.
  • Filled candles with no higher shadow/wick suggests a strong downtrend.

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The minimum fluctuation/movement (up or down) in the price of a security.

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