Unfortunately, Heikin Ashi is not the holy grail.

Heikin Ashi definitely ain’t no Ed Sheeran song.  It ain’t perfect.

Just like any other tool used for technical analysis, Heikin Ashi is useful but it does have some weaknesses or limitations.

Let’s go over what these limitations are.

Heikin Ashi candlesticks do not show true prices.

While the traditional Japanese candlesticks are derived from the actual prices, Heikin Ashi candlesticks are NOT.

Because the Heikin Ashi candlesticks are averaged, they do NOT show the exact open and close prices for a particular time period.

Let’s show an actual example.

Here’s a Heikin Ashi chart of EUR/USD on the daily (1D) timeframe:

Heikin Ashi does not show true prices

Focus on the last candlestick. A couple of things to notice:

  • The candle is red. Which means the candle closed lower than it opened.
  • Its open price was 1.09005.
  • Its close price was 1.08531.