Still using normal candlesticks in 2024 ?? Use the better candlesticks !

 Yes i am talking about the Heikin Ashi candlesticks. But before we learn more about them , lets quickly understand what are basic candlesticks and how they are used - 

- Candlesticks were invented by the Japanese back in 1700's to track the price of rice. 

- Candlesticks make it really easy to know the sentiments of all the traders collectively. By glancing at a chart, we can know what is the overall trend.

- These are most widely used all over the world by equity, forex and crypto traders.

- We can know the sentiment of the traders by looking at how the candle opened, how high it went, how low it went and finally where it closed. The closing is really important as it reflects who won the battle on that specific time frame. 

This is how a basic bearish and bullish candlestick is formed. 

Some of the most widely used bullish candlestick patterns are - 

Bullish Engulfing-

In this scenario, the bearish candle is completely engulfed by the bullish candle. 
It would be of even more importance if this occurs at the support zone.

Bullish Harami-

In this type of pattern, the bullish candle is completely inside the bearish candle's range. Harami in japanese means pregnant. Here from the pattern we can see that a big mother candle has a baby candle in front of it and hence it got this name. 

There are many more patterns but these are the most common ones. 

Now let's understand Heikin Ashi candles-

Heikin Ashi literally means "Average Bar" in Japanese. 
As the name suggests, it smoothens out the candlesticks and make it really easy to follow the trends. 

Heikin ashi candle is calculated as follows - 

Heikin Ashi candle = Open + High + Low + Close/ 4

                                   

                                                    

Another point to note is that the Heikin Ashi candle opens at the middle of the previous candle's body as it is taking in account the previous candle's close too while making the current candle.

These candlesticks remove all the noise that a normal candlestick chart has as we will see in the following charts comparing the normal candlesticks and Heikin Ashi candlesticks.

First, let's check the Nifty chart using normal candlesticks - 

Here you can see that there are a lot of gaps, many bearish candles inside the uptrend and vice versa. Basically there is a lot of choppiness in this chart which can confuse a new trader.

Now let's check the same chart using Heikin Ashi candles - 

As you can see, the overall trend has been smoothened out beautifully and the uptrends and downtrends are very easy to identify. 
There are no gaps too as we had learned above that the Heikin Ashi candle opens at the middle of the previous candle's closing price giving us a average and smooth pattern. 



Some points to note about Heikin Ashi candles- 

• Green or white candles indicate an uptrend ( color may vary depending upon the platform that you use )
• Red or black candles indicate a downtrend
• Green or white candle with no lower shadow indicate a strong uptrend and it means that it is better to keep riding the trend when that happens.
• Small body with upper and lower shadows indicate that the trend can reverse from here (Indecision). During this time, it is better to wait for the confirmation or either side. 
• Black or red candles with no higher shadows indicate a strong downtrend. We should keep riding our shorts position at that time as it tells us that the bearishness can continue from here. 
  
  I hope you liked these new candlesticks and if you want to learn more about Heikin Ashi candles and want to learn a really easy to follow strategy using Heikin Ashi candlesticks and Super Trend, you can check out my strategy on the Upsurge Platform.