🕯️Heiken Ashi Candles

Heikin Ashi candles are a type of price charting technique used in technical analysis. The term "Heikin Ashi" comes from Japan, meaning "average bar". It's used to better visualize price trends by smoothing out the price data, making it easier to spot trends and reversals.

Heikin Ashi charts are different from standard candlestick charts, primarily in the way that they are calculated and plotted.

The four parts of a Heikin Ashi candle are calculated as follows:

  1. Heikin Ashi Close: It's the average of the current period's open, close, high, and low.

  2. Heikin Ashi Open: It's the average of the previous Heikin Ashi candle's open and close. For the first period of a chart, this would just be the average of the open and close.

  3. Heikin Ashi High: This is the maximum of the current period's high, and the current Heikin Ashi candle's open or close, whichever is greater.

  4. Heikin Ashi Low: This is the minimum of the current period's low, and the current Heikin Ashi candle's open or close, whichever is lower.

By using average price data, Heikin Ashi charts create a smoother look at price movement, which can help traders more easily identify market trends and potential reversal points.

While Heikin Ashi candles offer valuable insights for trend identification and smoothing out market noise, we advise against their use in conjunction with our upcoming TradingView strategies. This recommendation stems from our methodologies' intrinsic requirements, which may not perfectly align with the averaging mechanisms of Heikin Ashi candles.

However, the utilization of Heikin Ashi candles with our indicators is acceptable and can potentially enhance visual interpretation of the underlying data. This use-case is due to the specific functionality of our indicators, which are compatible with the smoothed and averaged price data provided by Heikin Ashi candles.

Ultimately, our objective is to optimize your trading results, and our recommendations aim to align your usage of tools with their most effective applications within our system.

Last updated