Check out the original post on InformedTrades.
In this video we take a look at the Ichimoku Indicator. The charts and platform used in the video are from Forex.com; click here to register for a free demo account of their charting and trading platform.
Register for a Forex.com Demo Account
KEY POINTS
1. Developed in 1969 by Goichi Hosoda, a Japanese journalist who was known as "Ichimoku Sanjin;" this translates to "what a man sees in the mountain"
2. Ichimoku Kinko Hyo translates to "one glance equilibrium chart." As such, this indicator is designed to allow for a quick visualization of price behaviors across timeframes.
3. Ichimoku is unique for its emphasis on information derived from the averages of highs and lows rather than the opening or closing prices, or other factors
4. The advantage the Ichimoku indicator offers is that it provides layered, well-defined signals and simultaneous visualizations of short, medium, and long term averages.
5. The indicator consists of 5 plots that collectively help provide the aforementioned advantage.
THE FIVE PLOTS OF THE ICHIMOKU INDICATOR
1. Tenkan-san: This is derived from the average of the 9 period high and the 9 period low.
2. Kijun-sen: A slower version of Tenkan-san, this is the average of the 26 period high and the 26 period low.
The next two lines make up the cloud component of the Ichimoku indicator.
3. Senkou Span A: This is the average of the Tenkan-san and the Kijun-sen (add them and divide by 2). This is plotted 26 periods into the future.
4. Senkou Span B: This is the average of the 52 period high and the 52 period low. It is plotted 26 periods into the future.
5. Chikou Span: Projects today's price 26 periods back.
The image below illustrates the lines as seen on a chart.
http://www.informedtrades.com/images...moku-lines.png
USING THE ICHIMOKU CLOUD TO READ TRENDS
1. When price is above the cloud = bullish
2. When price is below the cloud = bearish
3. When price is in the cloud = choppy, rangebound market
4. When price is above the cloud, and when Senkou Span A is above Senkou Span B, that is extra bullish. Likewise, when price is below the cloud and when Senkou Span A is below Senkou Span B, that strengthens the bearish trend.
5. As the cloud is projected into the future, you can use it as a forecast of future support/resistance levels.
The chart below illustrates.
http://www.informedtrades.com/images...sh-bearish.png
ICHIMOKU CROSSOVER SIGNALS
1. When the Tenkan line crosses the Kijun line from below, that is a signal to buy.
2. When the Tenkan line crosses the Kijun line from above, that is a signal to sell.
THE CHIKOU SPAN LINE
When the Chikou span line is above the cloud and above price, that is bullish. Likewise, when the Chikou span line is below the cloud and below price, that is bearish.
LOOK FOR CONFLUENCE WITHIN THE ICHIMOKU INDICATOR
When crossover signals are compatible with what the Ichimoku cloud is saying about the trend, that is when the signal is most significant. For instance, if Tenkan crosses Kijun from below, and if Senkou A is above Senkou B and the current price is above both Senkou A and Senkou B, and if the Chikou line is above price and the Senkou Cloud that is an example of when all the components are bullish.
OTHER LINKS TO LEARN MORE ABOUT ICHIMOKU
Ichimoku Clouds - ChartSchool - StockCharts.com
Ichimoku Kink? Hy? - Wikipedia, the free encyclopedia
In this video we take a look at the Ichimoku Indicator. The charts and platform used in the video are from Forex.com; click here to register for a free demo account of their charting and trading platform.
Register for a Forex.com Demo Account
Inserted Video
KEY POINTS
1. Developed in 1969 by Goichi Hosoda, a Japanese journalist who was known as "Ichimoku Sanjin;" this translates to "what a man sees in the mountain"
2. Ichimoku Kinko Hyo translates to "one glance equilibrium chart." As such, this indicator is designed to allow for a quick visualization of price behaviors across timeframes.
3. Ichimoku is unique for its emphasis on information derived from the averages of highs and lows rather than the opening or closing prices, or other factors
4. The advantage the Ichimoku indicator offers is that it provides layered, well-defined signals and simultaneous visualizations of short, medium, and long term averages.
5. The indicator consists of 5 plots that collectively help provide the aforementioned advantage.
THE FIVE PLOTS OF THE ICHIMOKU INDICATOR
1. Tenkan-san: This is derived from the average of the 9 period high and the 9 period low.
2. Kijun-sen: A slower version of Tenkan-san, this is the average of the 26 period high and the 26 period low.
The next two lines make up the cloud component of the Ichimoku indicator.
3. Senkou Span A: This is the average of the Tenkan-san and the Kijun-sen (add them and divide by 2). This is plotted 26 periods into the future.
4. Senkou Span B: This is the average of the 52 period high and the 52 period low. It is plotted 26 periods into the future.
5. Chikou Span: Projects today's price 26 periods back.
The image below illustrates the lines as seen on a chart.
http://www.informedtrades.com/images...moku-lines.png
USING THE ICHIMOKU CLOUD TO READ TRENDS
1. When price is above the cloud = bullish
2. When price is below the cloud = bearish
3. When price is in the cloud = choppy, rangebound market
4. When price is above the cloud, and when Senkou Span A is above Senkou Span B, that is extra bullish. Likewise, when price is below the cloud and when Senkou Span A is below Senkou Span B, that strengthens the bearish trend.
5. As the cloud is projected into the future, you can use it as a forecast of future support/resistance levels.
The chart below illustrates.
http://www.informedtrades.com/images...sh-bearish.png
ICHIMOKU CROSSOVER SIGNALS
1. When the Tenkan line crosses the Kijun line from below, that is a signal to buy.
2. When the Tenkan line crosses the Kijun line from above, that is a signal to sell.
THE CHIKOU SPAN LINE
When the Chikou span line is above the cloud and above price, that is bullish. Likewise, when the Chikou span line is below the cloud and below price, that is bearish.
LOOK FOR CONFLUENCE WITHIN THE ICHIMOKU INDICATOR
When crossover signals are compatible with what the Ichimoku cloud is saying about the trend, that is when the signal is most significant. For instance, if Tenkan crosses Kijun from below, and if Senkou A is above Senkou B and the current price is above both Senkou A and Senkou B, and if the Chikou line is above price and the Senkou Cloud that is an example of when all the components are bullish.
OTHER LINKS TO LEARN MORE ABOUT ICHIMOKU
Ichimoku Clouds - ChartSchool - StockCharts.com
Ichimoku Kink? Hy? - Wikipedia, the free encyclopedia