Heikin-Ashi

Heikin-Ashi is a type of chart used in technical analysis to filter out price noise, making it easier for traders to identify trends. It uses a modified candlestick chart formula of close-open-high-low (COHL) instead of open-high-low-close (OHLC).

In a Heikin-Ashi chart, candlesticks in an upward trend are empty in colour and often only have a wick to indicate selling pressure, while downward trending candles are coloured and have a tail to represent buying pressure. When the candle body becomes short with both a wick and tail, it indicates a change in price direction and indecision of the market.

While Heikin-Ashi charts give a clearer general idea of price movements, it uses averages, which may not match real-time prices. Traders may use the Heikin-Ashi technique to complement other technical analysis indicators such as Bollinger bands and Fibonacci Retracements for a more concrete confirmation.

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