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Stocks Technical Analysis Indicators Part 3

Heikin-Ashi Price Bars

Heikin-ashi, Japanese for “average bar,” is a technique used to better visualize price trends by recalculating candlesticks. (Dan Valcu [2004]. “Using the Heikin-Ashi Technique,” Technical Analysis of STOCKS & COMMODITIES, Volume 22: February 2004).

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Calculating the New Candle

  • HaClose = (Open+High+Low+Close)/4
         = the average price of the current bar
  • HaOpen = [HaOpen(previous bar) + Close(previous bar)]/2
         = the midpoint of the previous bar
  • HaHigh = Max(High, HaOpen, HaClose)
         = the highest value in the range
  • HaLow = Min(Low, HaOpen, HaClose)
         = the lowest value in the range

Heikin-Ashi Chart

The heikin-ashi chart is a candle chart based on the recalculated values for open, high, low, and closing prices, but with a different interpretation.
standard candle chart and below the heikin ashi candle chart

Figure 5.10: At the top the standard candle chart and below the heikin-ashi candle chart.

At the top of figure 5.10, the standard candle chart, based on the real open, high, low, and closing prices. Below, the heikin-ashi candle chart, based on the re-calculated prices for open, high, low, and closing prices.

Interpretation of heikin-ashi candles:



Actual trend




Down trend


Normal trend

Up-moving white bodies

Down-moving black bodies


Strong trend

Up-moving white bodies without a lower shadow

Down-moving black bodies without an upper shadow


Weakening trend

Bodies are getting smaller; lower shadows are appearing

Bodies are getting smaller; upper shadows are appearing



Small bodies with upper and lower shadows

Small bodies with upper and lower shadows


Trend reversal

Small bodies with big upper and lower shadows (not always reliable)

Small bodies with big upper and lower shadows (not always reliable)

heikin-ashi Candles in MetaStock®

In MetaStock, it is not possible to create an indicator that will result in more than one data item displayed on a single bar. For heikin-ashi candles, however, you need four data items displayed on the same bar.

Good smoothing effect of the heikin ashi closing price average

If you really want to use heikin-ashi candle charts, it is best to buy conversion software that can automatically convert the data and then create a mirror of the data in heikin-ashi format.


“HeikinAshi4MetaStock” is a shareware program that does this; it is easy to find on the Internet.


In our LOCKIT application, we only use the average of the heikin-ashi closing price because it has a very good smoothing effect without lag, as you can see in figure 5.11.


Figure 5.11: Good smoothing effect of the heikin-ashi closing price average.

HA_C Calculation formula for the average heikin-ashi closing price:

haOpen:=(Ref((O+H+L+C)/4,-1) + PREV)/2;

Stocks Technical Analysis Indicators Next -Previous -Part 1 -Part 2 -Part 3 -Part 4 -Part 5

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