2004issue C021
Stacking heikin-ashi, swing charts, and a moving average in strong trends
The archive adds a recast candlestick construction to other trend-following tools, uses swing charts to classify a counter-move, and names a fifty-session moving average among the conditions that identify an emerging trend after consolidation.
- A recast candlestick construction can be added to other trend-following tools to help judge whether a market is still in a strong directional episode.
- Once a strong trend is underway, the working question is remaining aligned with that direction for as long as it lasts, from a single session to a span of months.
- Swing charts study successive turns so a counter-move can be classed as a pullback inside the trend or as a reversal that ends it.
- A fifty-session moving average is one condition used to identify an emerging trend after consolidation, and positive macro readings are not treated as a reason to skip day-by-day market analysis.
A modest-looking rise on a long chart
Broader US equity indexes were described as having rallied since March 2003. A chart spanning ten years or more still made that rise look modest relative to the longer record.
The archive still treats the episode as a strong directional move. It uses that setting to show how a recast candlestick construction can be added to other trend-following tools and to ask whether the market was still in a strong directional episode.
Whether the directional episode is still intact
Heikin-ashi is a recast of Japanese candlesticks used to make a strong directional episode easier to see and to stay with while it lasts. Added to other trend-following tools, that recast construction helps judge whether a market is still in a strong directional episode.
Once a strong uptrend or downtrend is underway, the working question is framed as remaining aligned with that trend for as long as it lasts, from a single session to a span of months.
Classifying the latest pause
A swing chart is a price structure that marks successive turns so a counter-move can be compared with a full change of direction.
Those successive turns are studied so a counter-move can be classified as a pullback, a correction inside the trend, or as a reversal that ends the case for staying with the prior trend.
A baseline after sideways trade
A moving average is a smoothed baseline of recent prices. A fifty-session moving average is named among the conditions used to identify emerging trends after a stock has been trading sideways.
That sideways pause is the consolidation after which an emerging trend may be identified.
Background that stays in the background
A weaker domestic currency is treated as background that had not yet shown up in market prices but could matter later, especially while the trend still looks strong.
Positive economic readings and strength outside the United States are not treated as a reason to skip day-by-day market analysis.
All readings on this track · 16 readings
- 2004Reconstructing Heikin-Ashi bars from smoothed OHLC
- 2004Heikin-Ashi candle construction as an OHLC transform
- 2004Stacking heikin-ashi, swing charts, and a moving average in strong trends
- 2007Constructing a Heikin-Ashi volume-price oscillator
- 2007A volume-price oscillator is a timing trigger, not a standalone entry
- 2008Heikin-Ashi OHLC construction and simplification
- 2008How a Heikin-Ashi candlestick oscillator is built from color, lag, and hold rules
- 2008Heikin-Ashi color-coded candles and smoothed trend filters
- 2010Heikin-Ashi smoothed percent b for divergence timing
- 2011Constructing Heikin-Ashi, moving-average, and MACD filters
- 2011Constructing candlestick, Elliott-wave, and Heikin-Ashi hypotheses
- 2012Constructing a three-state Heikin-Ashi trend filter
- 2012Heikin-ashi as a trend-state signal without candlestick-patterns
- 2013Heikin-Ashi volume gates, smoothing, and denominator floors
- 2013How Heikin-Ashi close and typical-price form a two-average crossover
- 2013Walk-forward tests for color-coded Heikin-Ashi crosses