Let’s look at a comparing the Heikin Ashi (HA) Candlestick Chart vs. Traditional Japanese Candlestick Chart.
A picture is worth a thousand pips so let’s look at some actual charts.
First, here’s a traditional Japanese chart of GBP/JPY on the daily (1D) timeframe:
Here’s the same GBP/JPY displayed with a HA candlestick chart:
Let’s put them both side-by-side:
The chart on the LEFT is the traditional Japanese candlestick chart.
And the chart on the RIGHT is the Heikin Ashi chart.
As you can see from the chart on the right, they smooth directional moves out in a way absent from the left chart.
Candles on traditional Japanese candlestick charts frequently change from green to red (up or down).
This can make them difficult to interpret.
On the other hand, candles on the HA chart display more consecutive colored candles.
This helps traders to identify past price movements more easily.
You’ll notice that Heikin Ashi charts have a tendency for its candles to stay green during an uptrend and stay red during a downtrend.
This is in contrast to traditional Japanese candlesticks that alternate color
This happens even if the price is moving strongly in one direction.