Heikin-Ashi Technique
Definition of 'Heikin-Ashi Technique'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) |
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Investopedia explains 'Heikin-Ashi Technique'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. |
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