A candle variant that averages current and prior prices to smooth a chart into longer runs of one colour, at the cost of showing real prices.
Heikin-Ashi recalculates each candle. The close is the average of the current bar's open, high, low and close. The open is the average of the previous Heikin-Ashi candle's open and close. The high and low are then stretched to include the real extremes.
The result is a chart with fewer colour flips and clearer visual trends, which is why it appeals to trend followers. Long stretches of green candles with no lower wick suggest steady buying pressure.
The critical warning: the plotted prices are not tradeable prices. A Heikin-Ashi close of 100.40 may correspond to a real close of 100.65. Never place stops or targets from Heikin-Ashi values, and expect it to lag genuine turns because it is a smoothing filter. Use it as a trend read next to a normal candlestick chart.
Original diagrams for the ideas on this page. Illustrative, not real market data.
The parts of a candlestick. One candle sums up a slice of time: the thick real body runs from the opening price to the closing price, and the thin wicks reach out to the highest and lowest prices traded. Colour tells you which way the body ran.
Educational only, not advice. Spotted an error? Post in Site Feedback.