Here’s another one from the mind of Sylvain Vervoot. In “Trading With The Heikin-Ashi Candlestick Oscillator” (Stocks and Commodities, December 2008), Vervoot describes a methodolgy for creating a “visual tool to complement (Heikin-Ashi) candlesticks, helping you enter and exit trades, resulting in higher profits per trade.” In a nutshell, the Heikin-Ashi Candlestick Oscillator (HACO) uses the triple exponential moving average (TEMA) to filter out some of the whipsaws inherent in basic Heikin-Ashi candlesticks. There’s a fair bit more to it than that but you can explore the article on your own. The indicator itself is just a binary “Buy/Sell” signal as shown by the alternating red and green colors. I’ve circled the places in the traditional Heikin-Ashi chart where a trend change was indicated but the HACO correctly filtered out the signal. The HACO can be used on any symbol and timeframe. As with the Vervoot Crossover, the HACO can easily be turned into a strategy which is also pictured below. In this instance, a two day five minute chart of the ES was used resulting in a proft of $2612 on one contract. The up/down trend moving average periods were set to 27 within the HACO.
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thinkorswim Heikin-Ashi Candlestick Oscillator 04/17/09
Triple exponential moving average (TEMA) to filter out some of the whipsaws.