Advantages of Haiken Ashi over traditional Japanese candlesHaiken Ashi candles are a very popular type of charts used in Forex trading. Unlike traditional Japanese candles, the Haiken Ashi chart uses a special algorithm to process the price data, which makes it easier to read trends and market direction.
Benefits:
What are the benefits of using Haiken Ashi candles? First of all, such charts allow us to detect market trends more clearly and easily read. In addition, Haiken Ashi charts allow us to more easily determine entry and exit points of positions, as well as determine stop loss and take profit.
Construction of Haiken Ashi candles:
Let's start by defining what Haiken Ashi candles actually are. These candles differ from traditional Japanese candles in many ways. First of all, in Haiken Ashi charts, the opening price of each new candle is the average of the opening and closing prices of the previous candle. The closing price, on the other hand, is the average of four values: the opening price, the closing price, the highest price and the lowest price. As a result, the opening and closing price of subsequent candles lags behind traditional Japanese candles.
Advantages of Haiken Ashi:
How can we use Haiken Ashi candles in Forex trading? First of all, it allows us to detect market trends more clearly and easily read. As a result, we can more easily determine entry and exit points for positions, and determine stop loss and take profit.
Strategies:
Trend strategy - involves using Haiken Ashi candles to identify market trends. For an uptrend, we wait for a series of green candles to appear, while for a downtrend, we wait for a series of red candles to appear. Once the trend is identified, we can open a position according to its direction.
Double candlestick strategy - involves waiting for the occurrence of two consecutive Haiken Ashi candles of opposite colors. When a red candle is followed by a green candle, this is a buy signal. On the other hand, when a green candle is followed by a red candle, it is a sell signal.
Inner candle strategy - involves waiting for the appearance of the Haiken Ashi candle, the body of which is completely contained in the body of the previous candle. When such a situation occurs, we can open a position according to the direction of the trend.
Reversal candle strategy - consists in waiting for the appearance of a long red candle after a series of green candles or a long green candle after a series of red candles. The appearance of such a candle may indicate a reversal of the trend, which gives a signal to open a position against the existing trend.
Veiling candle strategy - involves waiting for the appearance of a large Haiken Ashi candle, the body of which completely obscures the body of the previous candle. In this case, we can open a position according to the direction of the trend.
In conclusion, Haiken Ashi candles are a tool that can be very useful in Forex technical analysis. With this tool, we can more easily detect market trends, determine entry points.
On the other hand, Haiken Ashi candles are an addition to a set of various indicators for technical analysis. In our Manticore Invesmtents Scalping strategy, we combine Haiken Ashi candles with a strategy based on RSI and Bollinger Bands.
In the next parts of the tutorials, let's describe the use of RSI and BB.
