Let’s continue our discussion by learning how to interpret Heikin Ashi candlesticks.
|Green candlesticks with long bodies||Uptrend|
|Red candlesticks with long bodies||Downtrend|
|Small body surrounded by upper and lower shadows||Trend Pause or Trend Change|
|Green candlesticks with no lower shadows||Strong Uptrend|
|Red candlesticks with no upper shadows||Strong Downtrend|
The opportunity to flex?
Telling your friends that you use “Heikin Ashi” charts sounds pretty cool.
When compared to the traditional Japanese candlestick chart, Heikin Ashi slows down the speed of the market, eliminating unnecessary false signals.
False signals and retracements are minimized, giving you greater confidence in your price action analysis.
The visual representation of a “strong trend” allows you to stay in the trade without having to question yourself or make any knee-jerk reactions.
Heikin Ashi has some weaknesses.
Any indicator that is based on slowing down the signals is pretty much only useful when the price is trending.
In a sideways or choppy market, Heikin Ashi will kick yo ashi.
Heikin Ashin smooths the price.
However, it can be prone to being late in identifying trend reversals.
This means if you’re in a trade, you’ll end up with a late signal to close it and end up giving up some unrealized profits.
Heikin Ashi isn’t ideal for very short-term trading and scalping.
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