Heikin Ashi Candles

Heikin Ashi candles: also known as Heikin-Ashi or HA candles, are a type of candlestick charting technique used in technical analysis. The term "Heikin Ashi" translates to "average bar" in Japanese. Unlike traditional candlestick charts that display the open, high, low, and close prices of an asset, Heikin Ashi candles use a modified formula to calculate each candle's values.
The formula for Heikin Ashi candles takes into account the previous candle's open, high, low, and close prices. It uses these values to calculate the average prices for the current candle. Here's how the calculation works:
  • Open: The open price of the current Heikin Ashi candle is the average of the previous candle's open and close prices.
  • Close: The close price of the current Heikin Ashi candle is the average of the open, high, low, and close prices of the current candle.
  • High: The high price of the current Heikin Ashi candle is the maximum value among the high, open, or close prices of the current candle.
  • Low: The low price of the current Heikin Ashi candle is the minimum value among the low, open, or close prices of the current candle.
The resulting Heikin Ashi candles smooth out the price action, making trends and reversals easier to identify. They can help traders visualize the overall direction of the market and potential changes in momentum. Bullish and bearish Heikin Ashi candle patterns can provide insights into potential buying or selling opportunities.