4 o This is the average price of the current bar. 2 o This is the midpoint of wicks academy forex previous bar. The Heikin-Ashi chart is constructed like a regular candlestick chart, except the formula for calculating each bar is different, as shown above. The time series is defined by the user, depending on the type of chart desired, such as daily, hourly or five-minute.
The down days are represented by filled candles, while the up days are represented by empty candles. From the chart above, there are a few differences to note between the two types of charts. Heikin-Ashi has a smoother look, as it is essentially taking an average of the movement. The price scale is also of note. These charts can be applied to any market. Most charting platforms have Heikin-Ashi charts included as an option.
Hollow or green candles with no lower «shadows» indicate a strong uptrend: let your profits ride! Hollow or green candles signify an uptrend: you might want to add to your long position and exit short positions. Candles with a small body surrounded by upper and lower shadows indicate a trend change: risk-loving traders might buy or sell here, while others will wait for confirmation before going long or short. Filled or red candles indicate a downtrend: you might want to add to your short position and exit long positions. Filled or red candles with no higher shadows identify a strong downtrend: stay short until there’s a change in trend.
These signals may make locating trends or trading opportunities easier than with traditional candlesticks. The trends are not interrupted by false signals as often and are thus more easily spotted. The chart example above shows how Heikin-Ashi charts can be used for analysis and making trading decisions. On the left, there are long red candles, and at the start of the decline, the lower wicks are quite small.