Smoothing vs Actual Prices

“The smoothing makes it look more apparent as to what the trend and movement is. But beware, look at the actual price action. Large candles and gaps are disguised. Hence, for me, they are a great tool, but not the Holy Grail.”


Trying to flip between a chart with smoothed prices and a chart with actual prices is more hassle than I want to deal with. Overlaying the actual price with a line bar onto a smoothed HA chart is just too ugly to look at. But here’s a combo that’s easy on the eyes and does a good job of predicting when the “Two Dots” rule should be ignored.

Pick a stock, any stock, and then scroll the chart back in time and walk it forward, one bar at a time, until you see the dots change color. Pause there and compare where the HA candle is relative to the area plot and make a guess what to do next. For sure, there are some surprises. But I think I’m seeing an encouraging success rate.