Modified Japanese candlesticks.
A Heikin Ashi chart filters market noise and provides a clearer visual representation of the trend.
For beginner traders, this means that the trend is easier to see.
For experienced traders, the Heikin Ashi charts help keep them in trending trades, while still being able to see classical chart pattern setups.
Heikin Ashi candlesticks look similar to traditional Japanese candlesticks but they are different so don’t confuse the two.
Heikin Ashi is different from traditional Japanese candlestick charts, in that it takes the prior session open and close into account for the open, which removes any gaps between candlesticks (or bars) on the chart.
How to Calculate a Heikin Ashi Candlestick
|Open||Previous candle||(Open + Close)/2|
|High||Current candle||The highest point|
|Low||Current candle||The lowest point|
|Close||Current candle||(Open + High + Low + Close)/4|