Thread by @StockmoneyL

A 🧵about the famous Heikin-Ashi candles and why they are so useful.

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#Bitcoin #Crypto

Basically, Heikin-Ashi candles can be used to filter out a noisy chart and identify a clear up- and down trend

[note: you see here the exact same charts]

Decisive is not only the color of the candles (green = price goes up, red = price goes down), but also the direction of the wicks (shadows).

If the wicks point ONLY upwards = strong uptrend (bull)

If the wicks point ONLY downwards = strong downtrend (bear)

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So far, so good. Now it gets interesting. An up or down trend can be identified, but actually not that difficult. But how do we recognize a trend reversal or sideways movement?

Small bodies indicate a pause in the previously existing trend, without being strictly able to say exactly whether a trend reversal has taken place.

The Doji

The doji, when it occurs after a directional movement, has a reversal potential. It indicates that the price movement has stalled and a countermovement could begin.

We have seen this recently in the #Bitcoin chart. On February 2 on the 6h chart we see a clear doji.

It is important that we see a clear price movement after a doji, which then initiates the trend reversal.

If the Wicks are pointing DOWN, this indicates selling pressure.

If the wicks are pointing UP, this indicates buying pressure.

Taken together (1/2):

Through Heikin Ashi, the noise in the chart is filtered and you basically see the naked trend.

Bearish trends - They are almost exclusively created by bearish candles. Strong downtrends tend to have no upper wicks (shadows) in the candles.

Taken together (2/2):

Uptrends - They are almost exclusively formed by upward candles. Strong uptrends tend to have no lower shadows in the candles.

Small bodies show a pause in the trend and. Strong swings of the wicks or a doji candle can initiate a trend reversal.

Appendix

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from @kamsky_andrew

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