HACOLT (Heikin Ashi Candles Oscillator Long Term) is a technical indicator designed by Sylvain Vervoort. It is based on Sylvain Vervoort's previous indicator, HACO (Heikin-Ashi Candles Oscillator), which was described in his article "Trading with the Heikin-Ashi Candlestick Oscillator" for the December 2008 issue of Technical Analysis of Stocks & Commodities magazine.
Optimized for long-term trading, HACOLT shows three levels: 0, 50, and 100. These levels suggest "an open short position", "no open position", and "an open long position", respectively. Passing from a certain level to another is viewed as a trading signal:
- Rising from 0 or 50 to 100 suggests a Long Entry and Short exit;
- Falling from 100 to 50 or zero suggests a Long Exit;
- Falling from 100 or 50 to zero indicates a Short Entry.
Main principles of HACOLT include:
- HACOLT uses zero-lagging TEMA based on modified Heikin Ashi Close prices for data smoothing;
- Close price higher than its EMA is a Sell signal (represented as falling to zero level);
- Short candles suggest keeping a position. To keep a long position, candle's High should also be greater than or equal to previous Low; to keep a short position, candle's Low should be less than or equal to previous High. A candle is considered short if its real body is smaller than its High-Low range multiplied by candle size factor.
||The number of bars used to calculate TEMA.|
||The number of bars used to calculate EMA.|
||The factor used in short candle determination. Default value of 1.1 has no influence, whereas values lower than that will provide faster exits.|
||The Heikin Ashi Candles Oscillator Long Term plot.|
1. "Long-Term Trading Using Exchange Traded Funds" by Sylvain Vervoort. Technical Analysis of Stocks & Commodities, July 2012.
2. "Trading with the Heikin-Ashi Candlestick Oscillator" by Sylvain Vervoort. Technical Analysis of Stocks & Commodities, December 2008.
3. "The Quest For Reliable Crossovers" by Sylvain Vervoort. Technical Analysis of Stocks & Commodities, May 2008.
*For illustrative purposes only. Not a recommendation of a specific security or investment strategy.