Heikin Ashi Two Bar Strategy
Heikin Ashi Two Bar Strategy
Heikin Ashi Two Bar Strategy
This technique is used in combination with Bollinger Bands 14,2, ADX 14 , SSD 5, 3, 3 and EMA
9, 55, 120.
Buy/Sell signals:
Entry: after two hollow or two filled candles.
Leading indicator:SSD 5, 3, 3, crosses often 1-2 bar before
Confirmation: +DI/-DI-line-crossover.
+DI (green) and -DI (red) line (ADX 14) crosses sometimes 1-4 bars afterward entry point .
Price Momentum:
+DI stays on top of -DI — uptrend is in place.
-DI stays on top of +DI — downtrend is in place.
Exit Ponits:
– When Heikin-Ashi-bar-colour changes and/or Heikin Ashi bar closes over the counterpart
side of EMA 9 line.
– In all situation of +DI/-DI-line-crossovers (when trend is changing - two DI cross).
– Buy and exit situations are often signalize with SSD 5, 3, 3, crossing near 20 or 80 % line,
Role Reversal:
If after a newly created signal another opposite crossover happens within a short period of time, the
original signal should be disregarded and position protected soon or closed. (A)
(A)
Do not ride out the storm.
Tactical Planning
Trending or Ranging Environment?
Hollow candles with no lower shadows are used to signal a strong uptrend, while filled candles
with no higher shadow are used to identify a strong downtrend.
Let the buy or sell orders running if ADX is high (ADX 25 >) and Heikin-Ashi-Bars are over EMA
9 (uptrend) or under EMA 9 (downtrend) without any +DI/-DI-line-crossover.(B)
(B)
Stay in your winning trades.
Another thing to remember about volatility is that while a low volatility can hold for an extended
period of time, high volatility is not that durable and often disappears much sooner.
There are three different ways you can set up trades with Bollinger Bands: Range Trading,
Breakout Trading and Tunnel Trading.
Range is the distance between support and resistance for curent price action. It is the space between
the top and bottom of recent activity.
Bollinger Bands are self-adjusting. When the market becomes more volatile, the Bollinger Bands
expand or open up and more in opposite directions from each other. Whenever price enter a tight
trading pattern, the bands respond by contracting or moving closer together. In a range bound
market, the bands are usually parallel to each other.(D)
Heikin-Ashi-Candlestick-Pattern
Full bodied candles are considered "decision" candles, a decision candle tells us the market has
made a decision to go in a particular direction.
Indecision candles are candles with little or no body at all. These candles tell us the market cannot
make up its mind which direction it wants to go.
Grace note:
– Calculate your trade budget - define your stop price - define your risk tolerance - calculate
your trade budget - trade your budget (e.g. set at first one half of your investment, by
confirmation set the rest of investment) - identify Pivot Profit Zone (1 hour, 4 hours and 1
day) – watch for a pullback bounce (Fibonacci Retracement Levels) - don't trade where
indicision candles take to the skies - gives market ambiguous signals look forward to larger
time frames (if index frame: 5 min, look at 15 min, > 30 min, > 1h) - make Market
Analysis: Speed of the market(1), Momentum of price and Trend (1) – cope with pre- and post-
trading - commit 100 percent or walk away from the trade - use a trade journal properly –
(1)
There is a difference between market speed and price momentum: speed is how the market is
moving (look at 20, 55 EMA), Momentum is where price is going (e.g. reverse and continuation
patterns; where will the candles likely start to turn green again?).
The Heikin-Ashi technique is used by technical traders to identify a given trend more easily.
More to heikin-ashi-technique e.g.:
http://www.answers.com/topic/heikin-ashi-technique
Time Chart
Figure February 2, 2009 gives practical information how this technique can be used.
Labeling
Entry signals: E, (Entry signals can be buy or sell orders)
Exit signals: X (the matching part)
Indifferent candles: ABC or ABCDE
Thank you for investing your time. So I know Heikin-Ashi-two-Bar-Strategy has become a great
success and will positively impact your currency trading.
Happy pipp'n.
Kind regards.
sam