What is Heikin Ashi?

The four numbers, and where they come from

A Heikin Ashi candle has an open, a high, a low and a close like any other. The difference is that two of them are calculated rather than observed.

• The close is the average of the real open, high, low and close of that period. It is a number that sits somewhere inside the candle and almost never traded at the end of it.
• The open is the midpoint of the previous Heikin Ashi candle, so it is calculated from a number that was itself calculated.
• The high and the low are the real extremes of the period, widened to include the two numbers above.

Nothing here is wrong. It is a smoothing, it is honest about being one, and it is drawn in the shape of something that is not a smoothing. That is the whole problem.

How to recognise it without opening the settings menu

You will often be handed a chart rather than choosing one, so it is worth being able to tell.

• Long runs of one colour. Ten or fifteen candles the same way with no interruption is common here and rare on a real chart.
• Bodies that touch. Because each open is the middle of the previous body, consecutive candles almost never leave a space between them.
• No engulfing candle, ever. The same rule makes it arithmetically impossible for one body to swallow the previous one whole.
• Turns that arrive as small bodies with wicks on both sides rather than as one decisive candle.

The rules on this site that stop being true

Several things the other guides teach depend on the four numbers being real prices. On a Heikin Ashi chart they are not, and the rules break in different ways.

• A close beyond a level. The guide on market structure settles breaks with the close. Here the close is an average, so the number that broke the level may never have traded.
• The named candles. The engulfing candle cannot form at all, because each open sits inside the previous body. And a candle with no wick on one side, which is rare enough on a real chart to be worth noticing, turns up in run after run here as an artefact of the smoothing rather than as a one sided period. The guide on candlestick charts describes real ones.
• The three candle gap test. Consecutive Heikin Ashi ranges always overlap, so the test in the guide on fair value gaps answers no gap whatever the market actually did.
• The last candle before the move. Smoothing removes exactly the abrupt opposite candle that an order block is defined by.
• Levels drawn from closes. A cluster of Heikin Ashi closes is a cluster of averages, not a cluster of prices the market stopped at.

What a clean run does and does not prove

There is one honest use, and it is narrow. A long unbroken run of one colour is a compact way to say that this market has been trending rather than turning, which is the question the guide on market regimes is for.

What it does not do is tell you when that ends. The smoothing that produces the clean run is the same smoothing that delays the first candle of the other colour, and the delay is not fixed. It also flatters the eye: a run that looks orderly on the smoothed chart can contain days that were violent on the real one.

And it never gives you a price. An entry, a stop and a target all have to be numbers the market can reach, so they have to be read off the real chart even when the decision was made on this one.

Renko, and plain bar charts

Heikin Ashi is the common case, and it is not the only chart that is not a candlestick chart.

• Renko. A new brick is drawn when price has moved a fixed distance, so a brick is not a slice of time. Two bricks side by side can be a minute apart or a week apart, which removes the whole hierarchy set out in the guide on timeframes.
• Bar charts and line charts. These are honest: a bar shows the same four real prices in a different drawing, and a line shows the closes only. Nothing is calculated, so nothing on this site stops being true.

Questions people ask

Is Heikin Ashi better than candlesticks?

It answers a different question. It is easier to read for whether a market has been trending, and it is unusable for anything that needs a real price, because two of its four numbers are averages. Most people who use it keep an ordinary chart open beside it.

Do Heikin Ashi candles show the real price?

The high and the low come from real prices. The open and the close do not: the close is the average of the period's four prices, and the open is the middle of the previous candle. Neither of them is a price that traded.

Can you use support and resistance on Heikin Ashi?

Not for drawing them. A level is an area where the market stopped, and it has to be read from prices that existed. Once the level is drawn on a real chart you can look at the smoothed one, but the numbers have to come from the other side.

Does Heikin Ashi work on crypto and forex?

The formula does not care what the market is. It is calculated from whatever four prices the chart is fed, so it behaves the same way everywhere, including behaving the same way when it is misleading.

Reading the chart you actually have

Trading AI reads a photo or a screenshot of any chart and returns the market structure, the key levels, the momentum and a full trade plan. It reads what is drawn in the image, so a smoothed chart is read as the picture it is, and the numbers in the plan can only be as real as the numbers on the screen.

What an ordinary candle records, and why those four numbers matter: How to read a candlestick chart

The one question a smoothed chart answers well: What is a market regime?

What a model can and cannot take out of an image: How AI reads a trading chart.

This page is educational. It is not financial advice, and nothing here is a recommendation to buy or sell anything.