Normal candlestick charts are composed of a series of open-high-low-close (OHLC) bars set apart by a time series.
The Heikin-Ashi technique uses a modified formula in order to calculate the candles OHLC:
- xClose = (Open+High+Low+Close)/4 - The average price of the current bar.
- xOpen = [xOpen(Previous Bar) + xClose(Previous Bar)]/2 -Midpoint of the previous bar.
- xHigh = Max(High, xOpen, xClose) - Highest value in the set.
- xLow = Min(Low, xOpen, xClose) - Lowest value in the set.
As a result, the last price you see on a regular candlestick chart is different from the Heikin Ashi chart.
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