Heikin Ashi

Heikin Ashi is a Japanese charting technique that smooths price action by plotting candles built from averaged open, high, low and close values instead of raw prices. Each Heikin Ashi candle borrows information from the previous one, so consecutive bars connect and much of the short-term noise is filtered out. Traders use the resulting run of same-coloured candles to judge trend direction and persistence: long bodies with small opposite wicks suggest a strong move, while small bodies with wicks on both sides often mark hesitation or a possible turn. Because the values are averaged, a Heikin Ashi candle does not show the actual traded open and close, so entries, stops and gaps still need checking on a standard candlestick chart.