Heikin Ashi

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.

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‍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)

_{The above content is designed for informational purposes only, and is explicitly not investment advice. Algo Pilot is a US based technology company and not a bank, broker-dealer, or RIA. As such, Algo Pilot LLC does not provide investment advice and is not a member, SIPC. Brokerage services offered by 3rd parties are not directly affiliated with Algo Pilot LLC, and Algo Pilot users may choose the broker relationship that they desire.}