Heikin-Ashi candle construction as an OHLC transform

What the construction replaces

Heikin-Ashi is a constructed candle series that replaces each bar with averaged open, high, low, and close values so trend and pause states are easier to see than on raw candles. The same four-value construction can be applied to daily, intraday, weekly, or monthly bars. Historical worked examples use daily bars as one bar per session.

Four constructed values

Each bar is rebuilt from four explicit transforms. haClose is the average of the current bar's open, high, low, and close. haOpen is the midpoint of the previous constructed body, except on the first bar, where a seed open is chosen. haHigh is the highest of the real high, constructed open, and constructed close. haLow is the lowest of the real low, constructed open, and constructed close.

Because each constructed open is anchored to the previous constructed body, ordinary price gaps are absorbed into the modified candles rather than appearing as empty space on the chart.

Body color and five visual states

A constructed close above constructed open is treated as a bullish body. A constructed close below constructed open is treated as a bearish body. Sequences of white or filled bodies become the primary trend-state readout.

Candlestick patterns on this series are visual body-and-shadow states, not a separate market language. Normal trend is a run of rising white or falling filled bodies. Strengthening is longer bodies without a shadow against the move. Weakening is shrinking bodies with a shadow against the move. Consolidation is small bodies with both shadows. A possible turn is a very small body with long shadows, marked as not too reliable.

How later bars are determined

A spreadsheet construction seeds the first constructed open with the real open, then copies forward the recursive midpoint-open and average-close rules. Later bars are fully determined by prior constructed values and the current raw OHLC.

Once today's constructed open and close are known, tomorrow's constructed open is already fixed as their midpoint. The next bar's body color is determined only by where tomorrow's constructed close prints relative to that known level.

A timing overlay on body strength

The historical workflow treats the visual five-state reading as incomplete on its own. It adds haDiffCO, the difference between constructed close and constructed open, as a signed strength series, plus a short moving average of that series. The moving average is used only as a timing overlay to place entries and exits around body-to-indicator transitions, not as a standalone forecast of price.