Heiken-Ashi (Japanese for ‘average bar’) candlesticks are a weighted version of candlesticks calculated with the following formula:
- Open = (open of previous bar + close of previous bar)/2
- Close = (open + high + low + close)/4
- High = maximum of high, open, or close (whichever is highest)
- Low = minimum of low, open, or close (whichever is lowest)
Heiken-Ashi candlesticks must be used with caution with regards to the price as the body doesn’t necessarily sync up with the actual open/close. Unlike with regular candlesticks, a long wick shows more strength, whereas the same period on a standard chart might show a long body with little or no wick. Depending on the software or user preference, Heiken-Ashi may be used to chart the price (instead of line, bar, or candlestick), as an indicator overlaid on a regular chart, or an as indicator plotted on a separate window.
Information, charts or examples contained in this lesson are for illustration and educational purposes only. It should not be considered as advice or a recommendation to buy or sell any security or financial instrument. We do not and cannot offer investment advice.