What is it?
Heikin Ashi is a candlestick charting technique that smooths out price action to highlight trends, making it easier to spot sustained moves. It’s like a noise filter for regular candlestick charts.

How is it used?

  • Trend identification: Consecutive green (bullish) or red (bearish) Heikin Ashi candles indicate strong trends.
  • Reversal signals: Small-bodied candles with wicks on both ends often signal trend pauses or reversals.
  • Filtering noise: It reduces false signals in choppy markets.

How is it calculated?
Heikin Ashi candles are derived from regular price data (open, high, low, close) but use modified formulas:

  • Close: (Open + High + Low + Close) / 4
  • Open: (Previous Heikin Ashi Open + Previous Heikin Ashi Close) / 2
  • High: Max(High, Heikin Ashi Open, Heikin Ashi Close)
  • Low: Min(Low, Heikin Ashi Open, Heikin Ashi Close)
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