Heikin Ashi chart

What is the

Heikin Ashi chart?

Heikin-Ashi is a candlestick pattern technique that aims to reduce some of the market noise, creating a chart that highlights trend direction better than typical candlestick charts. The Heikin-Ashi technique is used by technical traders to identify a given trend more easily. Hollow white (or green) candles with no lower shadows are used to signal a strong uptrend, while filled black (or red) candles with no upper shadow are used to identify a strong downtrend.

Because the Heikin-Ashi technique smooths price information over two periods, it makes trends, price patterns, and reversal points easier to spot. Heikin-Ashi charts typically have more consecutive colored candles, helping traders to identify past price movements easily. The following signals are useful while using the Heikin-Ashi charts.

The charts can also be used to keep a trader in a trade once a trend begins. It's usually best to stay in a trade until the Heikin-Ashi candles change color. However, a change of color doesn't always mean the end of a trend, it could just be a pause.