How to read the weekly average candle (Heikin-Ashi)

• Average close = (this week's open + high + low + close) ÷ 4
• Average open = (last week's average open + last week's average close) ÷ 2
• Body = average close ÷ average open − 1

The average open is recursive: it comes from last week's values. So each week's average candle carries a little of the weeks before it.

• Average close = (10,670.01 + 11,498.98 + 10,524.00 + 11,374.01) ÷ 4 = 11,016.75
• Average open = (10,710.68 + 10,692.50) ÷ 2 = 10,701.59
• Body = 11,016.75 ÷ 10,701.59 − 1 = +2.95% → green, more than 1%

Coinbase BTC-USD daily data (the same prices as TradingView COINBASE), grouped Monday to Sunday (UTC).

• Body above +1%: green — buy next week
• Body below −1%: red — sell next week
• Anything in between is a small candle — noise, ignore it (a small red week while holding is only a warning)

During the week what you want to know is 'at what weekly close does the signal flip?'. Call the target average close T (buy: T = average open × 1.01, sell: T = average open × 0.99):

• Basic: deciding close = 4 × T − open − high − low
• Exception ①: if that is below this week's low, the close would become the new low, so deciding close = (4 × T − open − high) ÷ 2
• Exception ②: if that is above this week's high, the close would become the new high, so deciding close = (4 × T − open − low) ÷ 2

The 5–11 October week above: buy T = 10,808.60 → 4 × T − open − high − low = 10,541.42 (between the low and the high) → a close above 10,541.42 makes it more than 1% green. Sell T = 10,594.57 → the basic formula gives 9,685.29, below the low (10,524.00), so exception ① applies and the deciding close is 10,104.65.

The high and low keep changing during the week, so the deciding price has to be worked out again every day.

• The first-week seed: the data's first average open starts as (open + close) ÷ 2. A different starting point gives different values for the first few weeks.
• The week boundary: TradingView's crypto weeks run Monday to Sunday (UTC). Grouping by another boundary, such as a Friday close, can change the colour of the same prices.
• Exchange differences: an almost flat week, like one in November 2018, can flip colour depending on the exchange's prices (Coinbase vs Bitstamp). The 1% filter screens out such weeks.

Buying at the open the day after the green week (12 October 2020) at $11,374, you would sell the day after the first week whose body closed more than 1% red, 19–25 April 2021 (−9.11%), at $49,121. That is +331% after 0.1% trading costs.

The week just before, 12–18 April, still had a +1.19% green body. Within 90 days of the sale Bitcoin fell to $29,796.

This rule does not always win. On Bitcoin since 2015 only 24 of 52 trades won, and sideways markets brought several small losses (−8.5% on average). One big trend (wins average +53%) makes up for them. The rule is tuned for crypto weekly candles; on stocks it did worse than just holding.

1. When the weekly candle closes at Sunday 24:00 UTC, note that week's open, high, low and close from the same exchange.
2. Work out this week's average open from last week's average open and close (miss one week and every later value is off).
3. Work out the average close and the body and compare them with +1% / −1%.
4. Work the deciding price for next week backwards, and redo it every time the week's high or low changes.
5. Buy or sell the next day (Monday) only in a signal week; otherwise let the week go by.