Chart of the Day: XAU

August 22, 2011

Heikin-ashi removes the need to identify and translate subjective Japanese candlestick patterns.

The bearish engulfing pattern looks like one ready to reverse the uptrend. But…

Instead of looking at candle patterns, we use heikin-ashi which shows here a possible reversal with the first doji-like candle. The second one indicates the start of a consolidation. Today’s white heikin-ashi candle points to the start of an uptrend.  The heikin-ashi chart shows crystal clear trends.

Heikin-ashi chart for XAU 08/22/2011

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