# Introduction

Heikin-Ashi means "average bar" in Japanese. It is a candlestick chart. Unlike standard candlestick charts using open-high-low-close (OHLC) bars the Heikin-Ashi technique uses calculated values for the candles.

# Formula

Calculation Explanation
$\operatorname{Close} = \dfrac {Open+High+Low+Close}{4}$ Close equals the average price of the current bar
$\operatorname{Open} = \dfrac {Open (\text{previous bar}) + Close (\text{previous bar})}{2}$ Open equals the midpoint of the previous bar
$\operatorname{High} = Max (High,Open,Close)$ High equals the highest price of the set
$\operatorname{Low} = Min (Low,Open, Close)$ Low equals the lowest price of the set

# Usage

## Elimination of Noise

This indicator eliminates noise. So it prevents you from getting a lot of false signals. Compare the standard candlestick chart and the Heikin-Ashi chart:

## Trend Detection

Blue long candles with no lower shadows indicate a strong uptrend. Look at the strong uptrend on the chart below.

Red long candles with no upper shadows indicate a strong downtrend. Look at the strong downtrend on the chart below.

Reversal candles in the Heikin-Ashi charts look like Doji candlesticks. They have no or very small bodies, but long upper and lower shadows. Look at the reversal candles on the chart below.