Smoothed Heikin-Ashi Candles with Moving-Average Entry and Exit Signals
Summary
This indicator smooths Heikin-Ashi open, high, low, and close values with exponential averages, then plots the resulting candles alongside price averages. It describes common candle interpretations: runs of rising or falling bodies suggest direction, large bodies with limited opposing shadows suggest stronger movement, and small bodies or abrupt color changes may indicate consolidation or a possible reversal.
Entry and exit arrows use the open price relative to 7- and 10-period simple averages, with candle direction conditions intended to avoid signals against consecutive opposing candles. A state variable alternates signal direction and enforces a delay between trades; the displayed value records the smoothed close at each signal. The document supplies indicator code and default smoothing settings, but no performance results, market tests, stop rules, or transaction-cost analysis. The candle patterns and crossover conditions are heuristic signals, so their usefulness would depend on instrument, timeframe, and independent validation.
Key ideas
- Smoothed Heikin-Ashi candles are formed from recursively calculated candle values and exponential averages.
- Runs of candle colors and the size and shadows of candle bodies are presented as clues to trend strength or consolidation.
- Entry and exit arrows compare the open with 7- and 10-period averages while checking recent candle direction.
- The code limits signal frequency and records a reference close at each arrow, but provides no evidence of profitability.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.