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Ichimoku Kinko Hyo 198 replies

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Ichimoku

<TABLE cellSpacing=1 cellPadding=2 width="100%" border=0><TBODY><TR><TD>For information purposes only:

Ichimoku Charts

An Introduction to Ichimoku Kinko Clouds </TD></TR><TR><TD class=ItemInfo>by Nicole Elliott

Due for publication on 18 Nov 2006 - can be pre-ordered

http://books.global-investor.com/books/22962.htm?ginPtrCode=00000&identifier=

</TD></TR></TBODY></TABLE>
Quoting EffectiveFX
Looks like this thread is drying up.
Anyone interested in putting together the rules for a trading system based on Ichimoku? This is a tough indicator to use due to the scant amount of information available.
Yes, I am interested. However I want to use it for a 1D-timeframe on the wellknown indices, like Nikkei225, S&P500, Nasdaq, DAX and EuroStoxx. I use 7, 22, 44 as parameters, based on the number of days in 1,5 week, 1 and 2 months. The 9, 26 and 52 were based on the old 6-days working weeks.

Possible stategies:
Entry: trade after crossings of Tenkan-Sen and Kijun-Sen. Just like the crossing of a short MA and a long MA. (In fact both lines are "old-fashioned" MA, based and the average of highest high and lowest low.) According to some sources gold crosses (Tenkan-Sen goes through Kijun-Sen from below) should be done when they are above the cloud. And dead crosses (Tenkan-Sen goes through Kijun-Sen from above) should be done when they are below the cloud.
Exit: no idea. Maybe when they cross again? Or when they go into the cloud?
I would enjoy getting involved with this. I look at Nicole Elliott's charts from Mizuho every morning for a general idea of what the day will bring for the EurUsd. BUT right now I have about 6 things to investigate that are ahead of it.

Sorry but that is the way it is for me.

Lou
I did some testing on indices (Nikkei, S&P500, EuroStoxx, Nasdaq, timeframe 1 day) with a simple trading system, based on Ichimoku. The trading system is:

When Tenkan-Sen goes through the cloud from below, go long for a fixed amount of 1000. Close your position when the Tenkan-Sen crosses Kijun-Sen from above.

When Tenkan-Sen goes through the cloud from above, go short for a fixed amount of 1000. Close when the Tenkan-Sen crosses Kijun-Sen from below.

Buying and selling happen at the open of the next day.

The results are as follows for a period from 2000 to 2006:

Nikkei: 43 trades, +233 result (long trades +163, short trades +70)

S&P500: 51 trades, -282 result (long trades -249, short trades -33)

EuroSt: 44 trades, -210 result (long trades -210, short trades -252)

Nasdaq: 43 trades, +11 result (long trades -219, short trades +230)

Short trades are often better than long trades. Reason is probably that those indices have dropped a lot during the timeperiod. Noticable is that the system works much better in Japan. Maybe because it is a self-forfilling prophecy?

If people have another suggestion for a (simple!) trading system based on Ichimoku, I can try to backtest it.
For intrady, I replaced the Senko1 and Senko2 (=cloud):

I use two WMA:
WMA 24 shifted forward 12 periods
WMA 48 shifted forward 24 periods

with good results for intraday (4h, 1h)
This bank has a page with ichimoku-analysis of EURUSD, USDJPY and EURJPY:
http://www.mizuho-cb.co.uk/TresInter...X_-_Majors.htm
Quoting JosTheelen
This bank has a page with ichimoku-analysis of EURUSD, USDJPY and EURJPY:
http://www.mizuho-cb.co.uk/TresInter...X_-_Majors.htm
Hi guys,

If you're interested in learning more about Ichimoku, I provide daily analysis and commentary for EUR/JPY and USD/CHF as well as general articles about this wonderful charting system at www.kumotrader.com. NO - I am not soliciting or selling anything. I just happen to specialize in Forex analysis via Ichimoku Kinko Hyo and would love to share my thoughts/views of the market with any interested.

Ichimoku is WAY more powerful than the typical tenkan sen/kijun sen crosses that everyone bandies about. That's like having a Swiss Army knife and raving about how it has a corkscrew and ignoring the rest of the implements. Ichimoku provides precise trade entry, take profit and even pinpoints solid stop losses so there is no need to use anything else (or mix it up with other indicators as I have seen many trying to do).

- Ian Boersma
www.kumotrader.com
Ian boersma show us how Ichimoku provides precise trade entry, take profit and even pinpoints solid stop losses so there is no need to use anything else

Quoting iboersma
Hi guys,

If you're interested in learning more about Ichimoku, I provide daily analysis and commentary for EUR/JPY and USD/CHF as well as general articles about this wonderful charting system at www.kumotrader.com. NO - I am not soliciting or selling anything. I just happen to specialize in Forex analysis via Ichimoku Kinko Hyo and would love to share my thoughts/views of the market with any interested.

Ichimoku is WAY more powerful than the typical tenkan sen/kijun sen crosses that everyone bandies about. That's like having a Swiss Army knife and raving about how it has a corkscrew and ignoring the rest of the implements. Ichimoku provides precise trade entry, take profit and even pinpoints solid stop losses so there is no need to use anything else (or mix it up with other indicators as I have seen many trying to do).

- Ian Boersma
www.kumotrader.com
  • Post #29
  • Quote
  • Edited 2:00pm Oct 20, 2006 8:23am | Edited 2:00pm
Quoting toddanderson
Ian boersma show us how Ichimoku provides precise trade entry, take profit and even pinpoints solid stop losses so there is no need to use anything else
Hi Todd,

I have some examples of this on my website at www.kumotrader.com in the "Ichimoku Kinko Hyo" section. In addition, a colleague of mine, Vincent Hunt (www.huntfx.net) has a very extensive blog with a number of his own articles annotated with charts, etc. that will help you to understand how Ichimoku can do this.

Please feel free to keep pounding me with questions, as I love to discuss Ichimoku.

Regards,

Ian
Does Ichimoku work well only for daily trends and higher intervals?

As I check lower intervals, the indicator seems less reliable.
Quoting wheel of fire
Does Ichimoku work well only for daily trends and higher intervals?

As I check lower intervals, the indicator seems less reliable.
Hi Wheel of Fire,

As a trend following system, Ichimoku does tend to be more reliable on higher time frames. I personally use it effectively all the way down to the 1H charts, but below that it becomes sufficiently choppy that the various signals and structures provided by Ichimoku become less reliable.

Hope this helps!

- Ian
this indicator is a very very good indicator for large timeframe traders. I found it in MT4
I studied the Ichimoku wiki for two days over the weekend and came out of it very impressed. You stress using it as the only indicator. I'm trying that out this week. So far, good results.

My method prior to encountering Ichimoku was EMA 5 & 12 with Vegas 144 & 169 and ADX and parabolic sar.

While that worked pretty well, support and resistance levels remained an issue. Gauging the strength of a signal is the biggest problem under the aforementioned method. Determining signal strength is too much of a tea leaves reading adventure.

I attempted to beat the odds by taking every signal reasoning that there would be more good than bad. As you can guess, I saw many trades in the kumo clouds that I should not have taken. That is what convinced me to stop using the Force and start using Ichimoku.

Now a specific question:

When chikmou is up above the priceline and kijun/tenkan above the priceline, that should be a strong signal to buy but does the signal weaken if senkou B/A?

Note: I use "/" to mean "is over."
Quoting wheel of fire
I studied the Ichimoku wiki for two days over the weekend and came out of it very impressed. You stress using it as the only indicator. I'm trying that out this week. So far, good results.

My method prior to encountering Ichimoku was EMA 5 & 12 with Vegas 144 & 169 and ADX and parabolic sar.

While that worked pretty well, support and resistance levels remained an issue. Gauging the strength of a signal is the biggest problem under the aforementioned method. Determining signal strength is too much of a tea leaves reading adventure.

I attempted to beat the odds by taking every signal reasoning that there would be more good than bad. As you can guess, I saw many trades in the kumo clouds that I should not have taken. That is what convinced me to stop using the Force and start using Ichimoku.

Now a specific question:

When chikmou is up above the priceline and kijun/tenkan above the priceline, that should be a strong signal to buy but does the signal weaken if senkou B/A?

Note: I use "/" to mean "is over."
Hi Wheel of Fire,

I'm glad you like the Wiki and it's gratifying to hear that you are trying to trade using Ichimoku on its own without any other indicators. I am definitely a purist as I found that adding other indicators only ends up providing many contradictory signals that can paralyze your trading. Ichimoku is indeed a complete and fully integrated trading methodology that was designed to be used on its own. Kudos to you for giving up your other indicators to give it a chance in its "natural state"...

Regarding your specific question about chikou span and tenkan/kijun sen being above the price curve, yes that is a what we call a "three line bullish pattern" and it is a strong bullish signal. However, this pattern must be looked at vis-a-vis its relationship with the kumo. Is it above or below the kumo? If above, then the pattern is considered "strong". If it is within the kumo, it is considered "neutral" and if below the kumo, it is considered "weak". Another thing to consider is the "leading kumo" vs. the "current kumo". The leading kumo is that part of the kumo that extends in front of price action (by 26 periods). The current kumo is that part of the kumo that is right next to current price action. The leading kumo is significant in that it also helps form the longer-term picture of sentiment. If the senkou span A is ABOVE the senkou span B, then that is indicating a bullish tone. Likewise, if the senkou span B is ABOVE the senkou span A, then that is more bearish. The relative position of the senkou span A and senkou span B for the CURRENT kumo is not significant; this is only significant when it comes to the LEADING kumo.

You can see how Ichimoku provides multiple indications of market sentiment in one tidy package, right? In an ideal trade, you would have nearly all these 5 lines aligned in the same direction for a very high probability setup. Using multiple time frames (as in any trading system) is absolutely critical as well. One time frame may look absolutely wonderful for a bull trade, but looking one time frame higher, you may see that price is trading just under the kumo, which makes for a risky bull trade on your execution time frame. As a general rule of thumb, you need to look one time frame above to get your overall trend (up/down/neutral), use the time frame below that for your trade execution and then go one time frame below your execution time frame for tuning your entry. I like trading the Daily charts, so I look to the Weekly (and Monthly) for my trend, I execute on the Daily and I fine tune my entry on the 4H chart.

Keep us posted with your progress!

Best,

Ian
Dropping the other indicators wasn't a problem. The signals that ad hoc collections of indicators provide are fuzzy at best. It's nice to have STRONG, NEUTRAL, WEAK with various permutations of each.

The leading kumo helped me gain 75 more pips out of the sterling/yen (heretofore "imperial"). If I'm reading the daily chart correctly, the thick double flat-top kumo means there's a high probability of a sideways market developing after March 21st and holding a range through the end of the month.

In the image below, sar is there because of the next point...

I am curious about the end of the trend. With parabolic sar, the end comes when it "crashes into the priceline." On Ichimoku, it appears that once the priceline crosses the tenkan-sen almost halfway to the kijun-sen, the trend is over. If this is a strong indicator of the end of a trend, it's even better than parabolic sar. Sometimes by 50 pips.

I mention tenkan-sen as a sar equivalent because it is always closest to the priceline regardless of trend direction.

Final thought: the tenkan priceline cross I described above is usually accompanied by a vanishing kumo. The vanishing kumo appears to be the leading kumo in the case of trends at the end.
Attached Image
Quoting wheel of fire
Dropping the other indicators wasn't a problem. The signals that ad hoc collections of indicators provide are fuzzy at best. It's nice to have STRONG, NEUTRAL, WEAK with various permutations of each.

The leading kumo helped me gain 75 more pips out of the sterling/yen (heretofore "imperial"). If I'm reading the daily chart correctly, the thick double flat-top kumo means there's a high probability of a sideways market developing after March 21st and holding a range through the end of the month.

In the image below, sar is there because of the next point...

I am curious about the end of the trend. With parabolic sar, the end comes when it "crashes into the priceline." On Ichimoku, it appears that once the priceline crosses the tenkan-sen almost halfway to the kijun-sen, the trend is over. If this is a strong indicator of the end of a trend, it's even better than parabolic sar. Sometimes by 50 pips.

I mention tenkan-sen as a sar equivalent because it is always closest to the priceline regardless of trend direction.

Final thought: the tenkan priceline cross I described above is usually accompanied by a vanishing kumo. The vanishing kumo appears to be the leading kumo in the case of trends at the end.
Wheel of Fire,

You're definitely doing a great job digging into Ichimoku, so keep it up!

As far as the thin and flat kumo that extends from around March 15 through March 27, keep in mind that its flat nature is only showing us where equilibrium has been established based on past price action. The fact that it is projected forward 26 periods does not mean that it has any predictive value (e.g.: "on the 21st of March the market will do this..."). It only means that we need to be aware of the fact that the kumo at that point is very weak and could easily be breached in either direction.

In general, the thicker the kumo, the greater the price volatility preceding current price action. This volatility makes for more wide-ranging support and resistance which is why the kumo is thicker. In the case with Cable, this pair has been ranging (on the Daily chart) since early December. This has created a very thin band of equilibrium, around which price has been oscillating.

Trend change in Ichimoku is entirely dependent upon what time frame you are considering and what trading style you are using. As a trader of the Daily charts, I might be utilizing a bull Kumo Breakout strategy for my trade. This would mean that the trend could not be considered "over" until price broke back through the kumo and exited the bottom side. However, if I were trading using a Kijun Sen cross strategy, I might consider the trend over if price crossed and closed through the kijun sen.

I highly recommend you join our Kumo Trader Forum as your interest in Ichimoku will really benefit from having a group of traders available who all focus solely on Ichimoku. Check it out at www.boersmaandhunt.com/kumotrader_forum

Best,

Ian
Quoting kolachi
The link you provided is not a valid or it is not working now as I have tried it and I cant get anything.Can you repost it.
kolachi
There's an article here on ichimoku by Brian Dolan. It appeared in
SFOmag, in the March 2008 issue. The charts are kind of small, and
with the overlays they look crowded, but this is only a problem if you're
printing it.
Attached File(s)
File Type: pdf FOREX - trading with clouds - ichimoku.pdf   163 KB | 2,303 downloads
Life happens at the level of events. Trust only movement. - Adler
I've been using ichi to define the setups I was using before ichi... and it has helped greatly in identifying where I should really see the reversals.. Much of what I've read about ichi as far as setups, i dont' really use... but after adapting my other strategies with ichi and just watching for correlations.... It has become a very powerful advantage to me..

Just thought I'd post this, as I am now on the cusp of becoming VERY profitable.. even during these crazy times... it's not failing me as others are reporting on their strategies.
DireXiv Make it happen, no one else is going to do it for you...
Just wanted to bump this thread and getting it active again. I apologize if there is a more recent discussion of Ichimoku.
bumping this thread too, and adding something in the process:

quite a few write about using this technique down to 1 HR but not any lower. If you want to use it in the lower time frames as well (or acting closer to the market at any rate), you might want to try a chart that doesn't use time aggregation but tick-aggregation instead. Depending on broker I use candles that are between 20 and 100 pips each.
When aggregating on pips you're leaving the linear time domain, but it will allow you to get down closer to the market. Accept that this way sometimes the candles are created quickly, sometimes it takes a bit longer.

Cheers
Ohka
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