A type of candlestick chart that shares many characteristics with standard candlestick charts, but differs because of the values used to create each bar. Instead of using the open-high-low-close (OHLC) bars like standard candlestick charts, the Heikin-Ashi technique uses a modified formula:

Close = (Open+High+Low+Close)/4
Open = [Open (previous bar) + Close (previous bar)]/2
High = Max (High,Open,Close)
Low = Min (Low,Open, Close)

Investopedia Says:
The Heikin-Ashi technique is used by technical traders to identify a given trend more easily. Hollow candles with no lower shadows are used to signal a strong uptrend, while filled candles with no higher shadow are used to identify a strong downtrend.

This technique should be used in combination with standard candlestick charts or other indicators to provide a technical trader the information needed to make a profitable trade.

Related Links:
This tool smooths trends and makes them easier to indentify. Confirm Forex Momentum With Heikin Ashi
Enhance trend isolation and prediction of future prices with this technique. Heikin-Ashi: A Better Candlestick
False signals can drown out underlying trends. Find out how to tone them down and tune them out. Trading Without Noise

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