STOCK GOODIES PLAYS OF THE WEEK

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Classic Heikin-Ashi TA Patterns

Classic patterns and trend lines can also be used on Heikin-Ashi charts. In contrast to normal candlesticks, Heikin-Ashi Candlesticks are more likely to trend with strings of consecutive filled (black) candlesticks and strings of consecutive hollow (white) candlesticks. The chart below shows Apache (APA) falling with a string of filled candlesticks in late October. The Heikin-Ashi candlesticks formed a falling wedge and APA broke resistance with a surge in early November. A triangle consolidation then took shape as the stock consolidated in November. The upside breakout signaled a continuation of the bigger uptrend.



The next chart shows Monsanto (MON) with a classic correction in June 2011. The Heikin-Ashi Candlesticks were more than adequate to identify this correction and subsequent breakout. Notice how a falling channel formed as the stock retraced around 61.80% of the prior decline. The big breakout in late June signaled an end to this correction and resumption of the advance.