Heikin-Ashi Candlesticks

A long hollow Heikin-Ashi candlestick shows strong buying pressure over two days. Both traditional candlesticks and Heikin-Ashi candles are constructed using the open, close, high and low prices. The Heikin-Ashi chart is constructed like a regular candlestick chart, except the formula for calculating each bar is different, as shown above.

Overall the structure of the chart is not that different, the main change lies on the continuity of same coloured candles when there is trending behaviour. To finalise our comparison here you have an animated overlay of Hekin-Ashi candles on top of traditional candlesticks. It will give you a good idea of the effect of changing between each candle’s style. A Heikin Ashi chart shows you the direction of a trend through its color-coded candles. But there’s another type of chart that you should know about that uses a totally different technique to display price action. Our testing shows best timeframes for Heikin-Ashi are daily, as the reward-to-risk ratios per trade are typically higher.

• Heikin-Ashi Candlesticks use the open-close data from the prior period and the open-high-low-close data from the current period to create a combo candlestick.
• Japanese candlesticks show sudden sharp movements due to volatility, while Heikin-Ashi charts filter out much of this choppiness and instead focus on finding true trends in the market.
• We will continue to test more chart indicators in the future, but these are the results so far.
• Chartists can use Heikin-Ashi Candlesticks to identify support and resistance, draw trend lines or measure retracements.

What is the best charting software for Heikin Ashi?

First, it reduces the noise by eliminating some wicks that show up on traditional Japanese candlesticks. This makes it easier to spot trends and reversals without being distracted by minor price fluctuations. Second, it also makes identifying support and resistance levels easier, as the wicks will be more consistent. This allows traders to identify key points of entry or exit more easily. Due to their smoothing effect, traders can quickly identify trends in both directions using Heikin-Ashi candles. This allows traders to spot potential trading opportunities more easily and make decisions based on solid data.

We put all of the tools available to traders to the test and give you first-hand experience in stock trading you won’t find elsewhere. It’s essential to remember that entry and exit points may vary slightly since the price is smoothed. Nonetheless, test your strategies on Heiken Ashi candle charts to see if they work. You also don’t have to worry about doing the math; any good charting platform has them built in.

Make sure to backtest the strategy to ensure it has worked robustly in the past before risking any capital. Moving averages and Bollinger Bands can also be used with Heikin-Ashi charts to identify underlying trends. By combining Heikin-Ashi candles with these additional indicators, traders can reduce risk and make more informed decisions. Heikin Ashi charts are a variation of Japanese candlesticks. They have the same shape with bodies and wicks, but the color of each candle depends on the current trend. Consecutive green candles indicate that the trend is bullish and a sequence of red candles indicates that the trend is bearish.

I’ve used TrendSpider for 7 years for my research and testing. It auto-detects trendlines, patterns, and candlesticks, backtests ideas, and lets you use AI to create unique strategies and launch trading bots—with no code. Yes, we work hard every day to teach day trading, swing trading, options futures, scalping, and all that fun trading stuff. But we also like to teach you what’s beneath the Foundation of the stock market.

Do candlestick patterns work on Heikin-Ashi?

It’s also important to note that since the Heikin-Ashi is calculating an average, the current price of the candle may not be accurate. In other words, the market’s trading price may differ from what the candle tells us. Now you know which colour coding your trading platform uses to represent Heikin-Ashi candlesticks. Most charting platforms have Heikin-Ashi charts included as an option. Candlesticks that have no shadow or wick on one end are also called “shaved candles“. When there is no shadow, this means you’re in a strong trend.

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Our chat rooms will provide you with an opportunity to learn how to trade stocks, options, and futures. You’ll see how other members are doing it, share charts, share ideas and gain knowledge. The green arrow shows a strong advance marked by a series of Heikin-Ashi candlesticks without lower shadows.

HOW WILL AI AFFECT FINANCIAL MARKETS?

• Heikin Ashi candles aren’t 100% reliable, so you need technical analysis to confirm any moves you see happening or potentially happening.
• A long hollow Heikin-Ashi candlestick shows strong buying pressure over two days.
• The trends are not interrupted by false signals as often and are thus more easily spotted.
• On the left, there are long red candles, and at the start of the decline, the lower wicks are quite small.

No, candlestick patterns do not work on Heikin-Ashi; this is the major disadvantage of this chart type. If you want to trade candlestick patterns, use a Japanese Candlestick chart instead. Yes, our rigorous testing shows that Heikin-Ashi has higher success rates than candlesticks, providing fewer false signals, lower volatility, and more profitable reward-to-risk ratios. Heikin-Ashi charts are radically different from Japanese Candlestick charts because, on a daily chart, the opening, high, low, and close prices are averages of today and yesterday. It might not seem special, but my testing reveals it is revolutionary.

How to Use Heikin Ashi to Identify Trend Strength

The next chart shows Monsanto (MON) with a classic correction in June 2011. The Heikin-Ashi Candlesticks were more than adequate to identify this correction and subsequent breakout. Notice how a falling channel formed as the stock retraced around 61.80% of the prior decline. The big breakout in late June signaled an end to this correction and resumption of the advance. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

Understanding Heikin Ashi charts

The best heiken ashi charting software for trading, backtesting, and researching Heikin-Ashi is TrendSpider because they offer a fully integrated strategy tester. For free-to-use Heikin-Ashi charts, TradingView is the best platform. With Heikin-Ashi, we got a profit of 77% over 12 years, compared to the buy-and-hold result of a -22% loss.

The resulting candlestick filters out some noise in an effort to better capture the trend. Always remember, the best way to analyze a chart is by thinking and trying to make sense of the price action through logic. In the case of Heikin-Ashi candles they are an averaged representation of this behaviour. These candlesticks do not show a shadow in the OPPOSITE direction of the trend. More and more professional traders are adopting Heikin-Ashi because it produces more reliable trends for investing strategies. Major stock software developers like TrendSpider and TradingView have now incorporated Heikin-Ashi into their products.

The Heikin-Ashi candlesticks formed a falling wedge, and APA broke resistance with a surge in early November. As the stock consolidated in November, a triangle consolidation took shape. The upside breakout signaled a continuation of the bigger uptrend. The red arrows show a strong decline marked by a series of Heikin-Ashi candlesticks without upper shadows.

Is Heikin-Ashi Better Than Candlesticks?

Depending on which end lacks a shadow, there’s a name for each type of shaved candle. Copyright © 2025 FactSet Research Systems Inc.Copyright © 2025, American Bankers Association. SEC fillings and other documents provided by Quartr.© 2025 TradingView, Inc. To better understand them, let’s have a deeper look at how these candles are constructed. Our content is packed with the essential knowledge that’s needed to help you to become a successful trader.