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Technical Analysis -
Indicators of Technical Analysis
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Heikin-Ashi is a special style of displaying candles/trading that was created by Dan Valcu (some of the sources mention Yasuji Yamanaka). Heikin means "average" and Ashi means "bar".
It is not an typical indicator. It's aim is to display candles/bars in such a way so the trend can be easy to read. While the candles use to change very often in a traditional chart, Heikin-Ashi ignors small swings so we can see much longer single-coloured series of black and white candles in the adjusted HA graph (i.e. longer trends).
Heikin Ashi calculation:
HA Close = (Open + High + Low + Close) / 4
HA Open = (HA Open ps + HA Close ps) / 2
HA High = Max (High, HA Open, HA Close)
HA Low = Min (Low, HA Open, HA Close)
HA Open ps = previous candle HA Open
HA Close ps = previous candle HA Close
How to use it:
- Candles without any shadow indicate very strong trend
- Candles with a shadow up and down indicates a trend reversal comming soon. So get prepared for it.
Note: Heikin Ashi is a very nice and popular graph presenting technique. The prevailing trend is much more clear and the graph easier to read.
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