Glossary
Heikin-Ashi
A candlestick variant built from averaged prices, which smooths noise and makes trends easier to see at the cost of true prices.
On this page
Heikin-Ashi, Japanese for "average bar," is a way of drawing candlesticks from smoothed prices rather than the raw open, high, low and close. Each bar blends the current period's prices with the previous Heikin-Ashi bar, so runs of same-colored candles appear during trends and small reversals are muted. Traders use the charts to stay with a trend and to see its strength at a glance, but the bars do not show the prices that actually traded.
How it works
The first bar's HA open is usually seeded with the average of the regular open and close.
How traders read it
- Strong trends: long bodies with little or no shadow on the side opposite the trend (no lower shadows in an uptrend).
- Weakening: smaller bodies and shadows on both sides, similar to a doji-like candle.
- Possible reversal: a change of color after a run, though because of the averaging it arrives later than on a regular chart.
Cautions
The HA close is not the real closing price, and gaps disappear because each open is anchored to the prior bar. Never place orders or measure risk from HA prices, and check standard candles before acting. Classic candlestick patterns are defined on real prices and do not carry over directly.