Weekly Heiken Ashi High Low Trading Strategy

The weekly Heiken Ashi high low (pivot) trading strategy is a simple trading method that makes use of only the weekly time frame. Besides the Heiken Ashi candles, the other indicators used are the high/low pivot points. The trading strategy is easy to use but takes a lot of time both for waiting for a signal and for the trades to reach their objectives. The basic principle of this trading strategy is based on the concept of highs and lows that are formed and the subsequent price action thereafter. In a nutshell, when price closes above a new pivot high, we buy or go long and if price closes below the recent new pivot low, we sell or short. This trading method is almost similar to a trend following method.

The Heiken Ashi Candles are found on almost any charting platform and the pivot high/low indicator is also easy to find. In the lack of absence of the pivot high/low indicator, traders can visually plot the highs/lows for the specified period of time.

Chart Set up – Heiken Ashi High/Low

  • Time Frame: Weekly (for the simple reason that a weekly time frame tends to yield higher profits and price action is not that susceptible to choppy movements)
  • Heiken Ashi Candlesticks
  • Pivot High/Low Indicator set to 4 (4 weeks or 4 periods). So every time a 4 week new high or low is formed, we get to see a visual marker

Trading Methodology – Heiken Ashi High/Low

Scan the chart and look for the most recent high/low pivot levels. Wait for a full Heiken Ashi candle to open/close outside the pivot and place a pending Buy or Sell order on the high or the low of the Heiken Ashi Candle.

For targets: Use past pivot reference points or close the trade when a weekly Heiken Ashi candle closes in the Red (Bearish) or Green (Bullish) for longs and shorts respectively.

Long Trade Example

Heiken Ashi Pivot - Long Trade Example
Heiken Ashi Pivot – Long Trade Example

In the chart above, we have an example long trade.

After a pivot high at 1.58214 was formed, we notice a full candle that formed completely outside of this pivot high. So a pending Buy limit is placed on the high of the candle. 7 candles later, the trade was triggered. Stops which would have previously been placed at pivot low of 1.5437 would now be moved to the new recent low at 1.55739, giving a risk of 13.69 pips. After the trade was triggered, there was a continuous bullish rally marked by consecutive green bullish heiken ashi candles. After the first bearish Heiken Ashi candle was spotted, the trade would be closed giving a total profit of 212.3 pips.

Future Examples

GBPCAD - Heiken Ashi Pivot (Potential Trade) Example
GBPCAD – Heiken Ashi Pivot (Potential Trade) Example

In the same chart (GBPCAD) we see a pivot high/low formed at 1.86689 and 1.81641. We now look for a full candle to form outside of any of these pivot levels to take a long or short position.

Short Trade Example

Heiken Ashi Pivot Short Trade Example
Heiken Ashi Pivot Short Trade Example

In the short trade example, we see a full candle that traded below the previous pivot low. A pending sell order was placed on the low of this candle at 0.87207. After the trade was triggered, the stop level is moved to the recent high.

The trade is closed when we see a bullish Heiken Ashi candle yielding a 30 pip profit. Do note that the sentiment exhibited by the Heiken Ashi candle can be questioned and perhaps the trade could have been let to run. Such decisions are solely up to the trader to decide if they want to close the trade in profit or to risk keeping it open, which in this case could have given much more profits.

Why trade the Weekly Heiken Ashi High/Low Method

Advantages

  • Easy and simple to understand
  • Based on the trend following method
  • Does not use any complicated indicators
  • Not much of thinking involved and thus traders don’t have to spend too much time analyzing trades

Disadvantages

  • Not much of action
  • Trades can take anywhere from 2 – 7 weeks or more to be triggered
  • This method can seem very boring