| Ichimoku Kinko Hyo-Equilibrium chart at a glance Ichimoku Kinko Hyo is one of the famous trend trading trading system that has been successfully used in nearly every tradeable market. It is unique in many ways, but its primary strength is its use of multiple data points to give the trader a deeper, more comprehensive view into price action. This deeper view, and the fact that Ichimoku is a very visual system, enables the trader to quickly discern and filter "at a glance" the low-probability trading set ups from those of higher probability. There are 5 basic components in this system: |
- TENKAN SEN (turning line)
(HIGHEST HIGH + LOWEST LOW)/2 for the past 9 periods
- KIJUN SEN (standard line)
(HIGHEST HIGH + LOWEST LOW)/2 for the past 26 periods
- CHIKOU SPAN (lagging line)
CURRENT CLOSING PRICE time-shifted backwards (into the past) 26 periods
- SENKOU SPAN A (1st leading line)
(TENKAN SEN + KIJUN SEN)/2 time-shifted forwards (into the future) 26 periods
- SENKOU SPAN B (2nd leading line)
(HIGHEST HIGH + LOWEST LOW)/2 for the past 52 periods time-shifted forwards (into the future) 26 periods
The area between senkou span A and B making the KUMO ( the cloud)
The Kumo indicates the derection of the trend and the big supports and resistances.
Tenkan and kijun crossover generate the entry signal.
Chikou span messures the momentum of the trend.
+ Strong signals - A strong buy signal occurs when the Tenkan-Sen crosses above the Kijun-Sen from below. A strong sell signal occurs when the opposite occurs. The signals must be above the Kumo.
+ Normal signals - A normal buy signal occurs when the Tenkan-Sen crosses above the Kijun-Sen from below. A normal sell signal occurs when the opposite occurs. The signals must be within the Kumo.
+ Weak signals - A weak buy signal occurs when the Tenkan-Sen crosses above the Kijun-Sen from below. A weak sell signal occurs when the opposite occurs. The signals must be below the Kumo.
+ Overall strength - Strength is shown to be with the sellers if the Chikou Span is below the current price. Strength is shown to be with the buyers when the opposite is true.
+ Support/resistance levels - Support and resistance levels are represented by the presence of the Kumo. If the price is entering the Kumo from below, then the price is at a resistance level. If the price is falling into the Kumo, then there is a support level.
+ Trends - Trends can be determined by simply looking at where the current price is in relation to the Kumo. If the price stays below the Kumo, then there is a downward trend (bearish). Alternatively, if the price stays above the Kumo, then there is an upward trend (bullish).
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