Heikin-Ashi, at its origins, was a trend and noise filtering visual technique.
Those who know the recent story are familiar with the indicators I built, the quantifiable side of Heikin-Ashi.
Let's look at the chart below, identify some of the Heikin-Ashi-related elements and see how they are used. Some are straightforward, others are subtleties.
On the price chart, the red downtrend resistance is a classic.
The interesting piece is the haDelta panel, below the price chart. Past haDelta extremes work as support and resistance and anticipate trend reversals for most strong up/downtrends. They work well, with warnings in advance. The first resistance touch in March was an exception, but its message in advance couldn't have been ignored in late March.
On the right side of panel we have both common and a subtle haDelta patterns. As with price, trend lines apply successfully to haDelta highs and lows. Today, haDelta is ready to touch the resistance, an indication that long positions should be avoided.
The less-known signals here are the two brushes haDelta had with its short average. Every time you see such pattern, you should expect a continuation of the trend. (Caveat: nothing is certain)
The chart above shows a reliable top signal: a bearish Head-and-Shoulders formation with a theoretical price objective of as low as 220. Time will tell.
For those who love minimalist trading, the haDelta resistance breakout in late March provided an opportunity for a quick trade. Today, haDelta is below the second resistance, a sign the downtrend is in place and healthy.
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Heikin-Ashi provides far more trend and reversal indications than colors and their color shift. The quantifiable indicators work extremely well with basic elements of trading and technical analysis. They offer subtle patterns one cannot afford to ignore.
