Because they use averaged data, the current candle's open/close is not the real market price.
This ingenious charting technique doesn't just plot price; it averages it. By modifying the open, high, low, and close values using a specific formula, Heikin Ashi filters out the market volatility to give you a crystal-clear picture of the trend.
Let’s break down the essential Heikin Ashi candle patterns and how to trade them.
Imagine a stock has been falling (4 red candles with no wicks).
Enter (Japanese for "Average Bar").