It is a price charting technique that filters out noise.
It uses modified open, high, low and close prices:
haClose = (Open + High + Low + Close) / 4
haOpen = (Previous haOpen + Previous haClose) /2
haHigh = Max(High, haOpen, haClose)
haLow = Min(Low, haOpen, haClose)
Heiken Ashi makes trend identification, retracements and reversals easier:
Uptrend is identified as a series of white bodies.
Strong Uptrend is defined as a series of long white bodies with and no lower shadows.
Downtrend is identified as a series of black bodies.
Strong Downtrend is defined as a series of long black bodies and no upper shadows.
Weak trends are defined by the presence of smaller bodies.
Retracement is defined by the presence of smaller bodies and the presence of upper and/or lower shadows.
Reversal is defined by the presence of a Doji or color change.
