Heiken Ashi

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    It is a price charting technique that filters out noise.

    It uses modified open, high, low and close prices:

    • haClose = (Open + High + Low + Close) / 4
    • haOpen = (Previous haOpen + Previous haClose) /2
    • haHigh = Max(High, haOpen, haClose)
    • haLow = Min(Low, haOpen, haClose)

    Heiken Ashi makes trend identification, retracements and reversals easier:

    • Uptrend is identified as a series of white bodies.
    • Strong Uptrend is defined as a series of long white bodies with and no lower shadows.
    • Downtrend is identified as a series of black bodies.
    • Strong Downtrend is defined as a series of long black bodies and no upper shadows.
    • Weak trends are defined by the presence of smaller bodies.
    • Retracement is defined by the presence of smaller bodies and the presence of upper and/or lower shadows.
    • Reversal is defined by the presence of a Doji or color change.

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