The Heikin-Ashi is a type of candlestick chart that shares many characteristics with standard candlestick charts, but differs because of the values used to create each bar. Instead of using the open-high-low-close (OHLC) bars like standard candlestick charts, the Heikin-Ashi technique uses a modified formula.
Normal candlestick charts are composed of a series of open-high-low-close (OHLC) bars set apart by a time series. The Heikin-Ashi technique uses a modified formula:
| Price | Formula |
|---|---|
| xClose | (Open + High + Low + Close) / 4 |
| xOpen | [xOpen(Previous Bar) + xClose(Previous Bar)] / 2 |
| xHigh | Max(High, xOpen, xClose) |
| xLow | Min(Low, xOpen, xClose) |
The Hollow Solid Candlestick is a type of candlestick chart which compares previous day close to current day close (Green/Red) and current day open to current day close (Hollow/Solid).
| Type of candle | Description |
|---|---|
| Solid candle | Closing price of current candle is lower than Opening price of the current candle (Close < Open) |
| Hollow candle | Closing price of current candle is higher than Opening price of the current candle (Close > Open) |
| Green candle | Closing price of current candle is higher or equal to Closing price of previous candle (Close >= Previous Close) |
| Red candle | Closing price of current candle is lower than Closing price of previous candle (Close < Previous Close) |