This article written by Christian Kaemmerer was originally published in the July 2012 issue of Traders' Magazine.
- Christian Kaemmerer is founder of the web-service TA4YOU.com and is self-educated in technical analysis. He is always searching for additional tasks in which to apply his skill and expertise. His main focus is forex.
Gradually Heikin-Ashi charts have found their way into the trading world. Professionals have been using this method for several years now, but the general public has as yet neglected it. Let us have a look at the world of Japanese candlesticks and be convinced by their visual clarity.
In the year 2004 Swedish trader Dan Valcu reanimated the Heikin-Ashi charts after he stumbled across this kind of charting illustration during his studies of the Japanese indicator Ichimoku. After modifying this variation of candlesticks he noticed the impressive clarity as it changed the chart of the classic candlesticks based on a trend following character. The simple idea is the conversion of the four typical candlestick-values – open, high, low and close of one period. These four values are altered with the help of a simple arithmetic average calculation – see formula box on page 48 – and subsequently provide visual trend smoothing. You see the direction, strength and intensity of a trend in a single glance.
