Heiken Ashi Charts

Heikin-Ashi, alternatively spelled Heiken-Ashi, translates to "average bar" in Japanese. This technique is employed  in securities trading to identify market trends and forecast future prices. It enhances the readability of candlestick charts, facilitating easier analysis of trends.

For instance, traders can utilize Heikin-Ashi charts to determine opportune moments to stay in trades during a persistent trend and exit when the trend undergoes a pause or reversal. Given that most profits arise during trending markets, accurate trend prediction becomes essential. 

Regular Candlesticks on the left vs Heiken Ashi on the right for AAPL

Several distinctions exist between the two chart types, as illustrated in the above charts. Heikin-Ashi presents a smoother appearance as it essentially computes an average of the movement. Notably, Heikin-Ashi candles tend to stay red in a downtrend and green in an uptrend, providing a clearer trend indication. In contrast, conventional candlesticks alternate colors even when the price is predominantly moving in one direction.