Price Chart Types.
On the trading platform, the price charts are of different forms. All of these price chart types attempt to represent what is happening with the price of the underlying asset.
Here are some of the various price chart types that exist:
- Area Price Chart.
- Japanese Candlestick Price Chart.
- Heiken Ashi.
You can see that Heiken Ashi has been listed above.
Meaning that it is a price chart type.
But you know what, Heiken Ashi does not present the price of an asset in a manner we can buy and sell at, but is a price chart acting more as an indicator to show the general trend.
What is Heiken Ashi?
Heiken Ashi is a type of price chart which shows a smoothed version of the price relative to that shown by the Japanese candlestick price chart.
The assumption here is you have already interacted with the Japanese candlestick price chart.
The Japanese candlestick price chart is the most commonly used and the easiest to use of all price chart types.
It is the one we use every other time we are referring to candlesticks, candlestick patterns, and words to that effect.
Now, I know you understand the Japanese candlestick chart.
If you don’t, here then here is a simple explanation.
It is the standard candlestick chart whose representation of the price is smoothed by the Heiken Ashi price chart.
Heiken Ashi actually means average bar.
The Heiken Ashi price chart averages and shows a smoothed price compared to that shown by the standard candlestick chart.
Heiken Ashi is likened to the moving average because it averages and shows a smoothed price, just like moving averages.
The difference here is that Heiken Ashi, after smoothing the price, represents it in form of candlesticks while the Moving average represents it in form of a line.
Heiken Ashi Formula.
Here is the formula applied in the calculation of Heiken Ashi:
- Heiken Ashi (HA) Open = Average of the Open and Close of the previous Heiken Ashi bar.
- HA Close = Mean value of the Open, Close, High, and Low of the current Heiken Ashi bar.
- Heiken Ashi (HA) High = Maximum value from the High, Close, or Open of the current Heiken Ashi bar.
- HA Low = Minimum value from the Low, Close, or Open of the current Heiken Ashi bar.
It is clear from the above data that the Heiken Ashi Price chart employs both past and current data to smooth the price, just like the moving averages do.
Moving Averages are trend indicators and in a similar manner, the Heiken Ashi price chart can be used to catch trends.
You must be wondering how you can catch trends in Olymp Trade with Heiken Ashi candlestick analysis, right?
It is easier with a moving average because moving averages are just lines pointing towards the direction of the trend, but what about Heiken Ashi candlesticks?
In this post, I will show you exactly how to catch trends in Olymp Trade with Heiken Ashi candlestick analysis.
Reading Heiken Ashi Price Charts.
Before we can proceed to know how to catch trends in Olymp Trade by analyzing Heiken Ashi candlesticks, we must first know how to read Heiken Ashi charts.
It’s the only way we can then know what the various Heiken Ashi candlesticks mean and thus use the relevant candlesticks appropriately to catch trends in Olymp Trade.
Here is the simple interpretation by color and structure of Heiken Ashi candlesticks in Olymp Trade:
- Red Heiken Ashi Candlesticks are bearish.
- Red Heiken Ashi Candlesticks without Upper wicks are strongly bearish.
- Green Heiken Ashi Candlesticks are bullish.
- Green Heiken Ashi Candlesticks without Lower wicks are strongly bullish.
- Heiken Ashi Candlesticks with significant upper and lower wicks then a small body are neutral. They may point to price reversal or pause.
Catching Trends in Olymp Trade with Heiken Ashi Candlestick Analysis.
Now that we have an understanding of how to read Heiken Ashi price charts, we can then proceed to see how to catch trends in Olymp Trade.
This is by analyzing the possible meaning of how Heiken Ashi candlesticks present the price.
Heiken Ashi candlesticks filter much noise shown on standard Japanese candlestick chart to show the general trend of the market.
It does so by showing consecutively bullish or bearish candlesticks even where the standard Japanese candlestick chart had interjections of candlesticks against the general trend.
Let us deal with this in these four ways:
- Catching Uptrends in Olymp Trade with Heiken Ashi Candlestick analysis.
- How to Catch Downtrends in Olymp Trade with Heiken Ashi Candlestick analysis.
- Catching Trend reversals in Olymp Trade with Heiken Ashi Candlestick analysis.
- How to Catch Sideways trends or Price Congestion areas in Olymp Trade with Heiken Ashi Candlestick analysis.
If the price is trending upwards, there are consecutive green Heiken Ashi candlesticks without lower wicks.
We said in the reading of Heiken Ashi price charts that green Heiken Ashi candlesticks are bullish.
Further, green Heiken Ashi candlesticks without lower wicks are strongly bullish.
Therefore, if many green Heiken Ashi Candlesticks form consecutively, then such is an uptrend.
It is a strong uptrend if such many green Heiken Ashi candlesticks have no lower wicks and occur consecutively.
A healthy or strong uptrend on the standard Japanese candlestick chart may have minor fluctuations of bearish candlesticks.
However, Heiken Ashi filters all that noise to show a perfectly healthy or strong uptrend of all green candlesticks.
For a market that is trending downwards, there are consecutive red Heiken Ashi candlesticks without upper wicks.
From the reading of Heiken Ashi price charts, facts have it that red Heiken Ashi candlesticks are bearish.
Red Heiken Ashi candlesticks without upper wicks are further described as strongly bearish.
What that means is, if many red Heiken Ashi candlesticks follow each other consecutively on the chart, then such is a downtrend.
A strong downtrend is shown by many red candlesticks without upper wicks following each other consecutively on the chart.
A healthy or strong downtrend on the standard Japanese candlestick chart may have minor fluctuations of bullish candlesticks.
However, Heiken Ashi filters all that noise to show a perfectly healthy or strong downtrend of all red candlesticks.
Catching Trend Reversals.
A market trend nearing reversal is shown by the neutral Heiken Ashi candlesticks with both substantial upper and lower wicks and a small body.
Has the market been in a strong uptrend shown by green candlesticks without lower wicks?
Did you just begin to notice Heiken Ashi candlesticks with long upper and lower wicks and small bodies?
That may mean the uptrend is exhausted and may soon reverse downwards.
On the contrary, was the market in an all-red Heiken Ashi candlestick without upper wicks downtrend?
Did you then start to notice candlesticks with long upper and lower wicks and small bodies?
That may mean the downtrend may reverse upwards soon.
Once you notice such neutral Heiken Ashi candlesticks, switch fast to the standard Japanese Candlestick price chart.
See if you can locate standard Japanese candlesticks pointing towards that reversal, which is highly likely so.
Take this for example.
An all green Heiken Ashi candlestick uptrend followed by small-bodied Heiken Ashi candlesticks with long upper and lower wicks.
The small-bodied Heiken Ashi candlesticks with long upper and lower wicks are most likely to correspond to candlesticks such as bearish Popgun bar pattern, evening star, bearish engulfing, and other bearish reversal candlesticks on the standard Japanese candlestick chart.
If such small-bodied Heiken Ashi candlesticks do not correspond to trend reversal patterns on the standard Japanese candlestick chart, then they may mean pullbacks.
Pullbacks are areas where the trend pauses before the price resumes in the direction of the primary trend.
Catching Sideway trends or Price Congestion Areas.
Heiken Ashi candlesticks with small bodies and long upper and lower wicks occurring consecutively may mean a sideways trend or an area of price congestion.
Areas of price congestion are areas where the price does not move significantly.
Profiting from trades placed in such areas is therefore difficult.
If you spot such Heiken Ashi candlesticks forming consecutively, it’s not time to trade but to stop trading.
Wrapping Up on How to Catch Trends in Olymp Trade with Heiken Ashi Candlestick Analysis.
You now understand how you can catch trends in Olymp Trade with Heiken Ashi candlestick analysis.
Once you catch an uptrend, go back to the standard Japanese candlestick chart and look for up trade setups and enter up trades. Or better yet, split your Olymp trade screen as in the image above.
Hold them until you notice downward trend reversal Heiken Ashi candlesticks then exit.
Do the opposite for a downtrend and avoid areas of price congestion.