Ichimoku Kinko Hyo
Ichimoku Kinko Hyo
Ichimoku Kinko Hyo Technical Indicator is designed to work on weekly and daily charts. It characterizes the market trend, support and resistance levels, points out signals to buy or to sell.
Indicator’s lines are based on four different time intervals, which set the dimension of its parameters:
- Tenkan-sen – the average price value during the first time interval defined as the sum of maximum and minimum within this time, divided by two;
- Kijun-sen – the average price value during the second time interval;
- Senkou Span A – the middle of the distance between two previous lines shifted forwards by the value of the second time interval;
- Senkou Span B – the average price value during the third time interval shifted forwards by the value of the second time interval;
- Chinkou Span – the closing price of the current candle shifted backwards by the value of the second time interval.
The area between the Senkou Span A and Senokou Span B lines is hatched with another color and called “cloud”.
- If the price is inside the cloud, the market is considered to be of no trend while the sides of the cloud become levels of support and resistance.
- If the price is above the cloud, both lines of the cloud become the support levels.
- If the price is below the cloud, both lines are considered to be the resistance levels.
If the Chinkou Span line traverses the price chart in the top-down direction it is signal to sell while if the Chinkou Span line traverses the price chart in the bottom-up direction it is signal to buy.
Kijun-sen points out the market movement. The price will rise if it is situated above this line. The crossing of this line by price forecasts the trend change.
Tenkan-sen indicates the market trend. If it rises or falls, then there is an upward or downward tendency respectively, while its straight direction means that the market has gone into the channel.
Tenkan-sen and Kijun-sen generate signals to buy or to sell:
If Tenkan-sen traverses Kijun-sen in top-bottom direction then it is a signal to buy, while the opposite direction may be considered as the signal to sell.
Similar information about indicators you can find in information system of trade platform MetaTrader 4 (Help-> Help Topics [F1] -> Ananlitics -> Technical Indicators).