i chimo ku basics

7/27/2019 i Chimo Ku Basics

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Chart Interpretation, Basics

- Strong signals - A strong buy signal occurs when the Tenkan-Sen crosses above the Kijun-Sen from bel

- Normal signals - A normal buy signal occurs when the Tenkan-Sen crosses above the Kijun-Sen from b

- Weak signals - A weak buy signal occurs when the Tenkan-Sen crosses above the Kijun-Sen from belo

- Overall strength - Strength is shown to be with the sellers if the Chikou Span is below the current pric

- Support/resistance levels - Support and resistance levels are represented by the presence of the Kum

- Trends - Trends can be determined by simply looking at where the current price is in relation to the K

Lets start by understanding what the name of this indicator means, in order to understand how it is us

So, we can translate the full name Ichimoku Kinko Hyo to Instant view of the balance chart. This in

The Ichimoku Kinko Hyo Technical Indicator is predefined to characterize the market Trend, Support an

When defining the parameters of the indicator, four time intervals of different lengths are used: these l

It could sound a bit complicated at the beginning, but lets see the lines and what they represent:

1. 1.Tenkan-Sen, RED in our chart, shows the average price value during the first time interval defined

2. 2.Kijun-Sen shows the average price value during the second time interval or base line (BLUE) - (Hi

3. 3.Senkou Span A shows the middle of the distance between two previous lines shifted forward by t4. 4.Senkou Span B, GREY in our chart, shows the average price value during the third time interval sh

Finally, there is Chikou Span, or lagging span (GREEN), the most current closing price plotted 22 time pe

The distance between the two Senkou lines is hatched with another color and called "cloud" or KUMO.

This means that:

If the price is above the cloud, its upper line forms the first support level, and the second line forms t

If the price is below the cloud, the lower line forms the first resistance level, and the upper one forms

If the price is between these lines, the market should be considered as non-trend, and then the cloud

Ichimoku analysis is similar to Moving Average analysis. Buy and sell signals are given by cross-overs.

First we can say that the Kijun-sen BLUE is used as an indicator of the market movement. If the price is

The Tenkan-sen is used as an indicator of the market trend. If this line increases or decreases, the trend

However, the relative positions of the Kijun Sen and Tenkan Sen are also important: as we just said, bas


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But we should also take care of the positions of price against the cloud and of the Tenkan Sen and Kijun

Lets see an USD JPY weekly chart: price is breaking above the first resistance level, base of the cloud. Ki

If the Chinkou Span line traverses the price chart in the bottom-up direction it is a signal to buy. If the C

Interpreting the Chart

Here is a list of signals and how you can spot them:

Strong signals - A strong buy signal occurs when the Tenkan-Sen crosses above the Kijun-Sen from bel

Normal signals - A normal buy signal occurs when the Tenkan-Sen crosses above the Kijun-Sen from b

Weak signals - A weak buy signal occurs when the Tenkan-Sen crosses above the Kijun-Sen from belo

Overall strength - Strength is shown to be with the sellers if the Chikou Span is below the current pric

Support/resistance levels - Support and resistance levels are represented by the presence of the Kum

Trends - Trends can be determined by simply looking at where the current price is in relation to the K

Ichimoku rates the strength of bullish and bearish cross overs, too. A bullish crossover signal that occur

Hi guys,

Since Ichimoku has recently caught a lot of attention in the Trader's circle and I couldnt find a referenc

Few important points:

Please note in advance that some of the concepts and interpretations you find here on this page will be

I've a couple of reasons to look at Ichimoku differently, first that no system in world is perfect and we s

So please bear with me if you find some of the concepts defined below as different and / or unique and

Bit of History:

The Ichimoku Cloud was originally called the 'Ichimoku Kinko Hyo.' Where Ichimoku means 'one glance,

Ichimoku Components:
http://mediaserver.fxstreet.com/Reports/d78f286a-bc3f-4b8f-9b4f-2182c632e69b/1_20090729095630.jpg


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Essentially made up of SIX major components, the Ichimoku offers a rich view of whats happening in th

1. The Tenkan-sen: (Conversion Line): is a nine-period moving average

2. The Kijun Sen: (Base Line): is a twenty six-period moving average

Now let's take a look at the most important component, the Ichimoku "cloud, which represents curren

3. Senkou Span A: The sum of the Tenkan Sen and the Kijun Sen divided by two. The calculation is then

4. Senkou Span B: The sum of the highest high and the lowest low divided by two. This calculation is tak

Now the most important two components of Ichimoku:

5. Kumo cloud: The cloud is formed by using the Senkou Span A and Senkou Span B. Kumo offers a num

5.1. Support/resistance levels: Firstly, if todays candle is above the Cloud, the trend is for higher prices.

5.2. Cloud thickness: The thickness of the Cloud is important. The thicker the Cloud, the less likely it is t

5.3. Crossover points: Many experts believe that this has no significance, my experience tells me that it

5.4. Trend reversals: Thin sections in the Cloud give us an idea of when the market is likely to change tr

6. Chikou Span: If you visit Youtube and search for Ichimoku, you will find a Video explaining how this s

6.1. Chikou Span is used in combination with todays candlestick:

if Chikou Span is trading above the candlestick of 26 days ago, then todays market is said to be in a b

if Chikou Span is trading below the candlestick of 26 days ago, then todays market is in a long term b Same idea for Chikou Span itself and the Clouds: above the Cloud of 26 days ago, then today is bullish

Few rigid ideas:

If you do some homework and join some of the active forums on web, you will find few rigid ideas / co

1. Ichimoku can only work on Daily Charts: Lets put it this way, Ichimoku doesnt know itself whether th

2. 26/52 are the only settings that work with Ichimoku: Of course not dont take my word, but try starti

3. Ichimoku does not work on Forex: In combination with the above points, people also claim that the I

4. Ichimoku works only during the Trending market. Quite contradictory to the basic idea behind Ichim

5. Ichimoku should not be combined with other Indicators. OK, and why is that ?

Over the years, I've combined Ichimoku with several other indicators and have always found that it onl

The most basic method of trading the Ichimoku cloud is with a simple crossover. However, with six diff
http://www.trading.com.au/http://www.trading.com.au/


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For the Ichimoku crossover strategy, the red Kijun-sen, a simple moving average with a 26-candle lookb

When the Tenkan-sen crosses above the Kijun-sen, its a bullish indication and may signal a long ent

When the Tenkan-sen crosses beneath the Kijun-sen, its a bearish indication and may signal a short

The word may in the two sentences above is important as no signal is automatic with the Ichimoku. E

The Kumo provides the strongest of these confirmations. The Kumo is the cloud itself, the meshed-in la

For long entries, strong confirmation comes when the Tenkan-sen crosses above the Kijun-sen while

If the crossover higher occurs while below the Kumo, the long entry signal is weaker, as the clouds

Crossovers that occur within the Kumo carry a neutral bias.

For short entries, strong confirmation comes when the Tenkan-sen crosses beneath the Kijun-sen w

If the crossover lower occurs while above the Kumo, the short entry signal is weaker, as the support

Finally, theres the Chikou span, which is the current candles closing price moved 26 candles into the p

A long entry signal is stronger if it occurs beneath the Chikou span, and

A short entry signal is stronger if it occurs above the Chikou span.

The entry signal is complete with the significant candles close, e.g., the trade is placed on the first cand

I have been a regular to babypips from quiet some time and have learnt a great deal from all of you.

I have been trading currencies for past 4 years. It has been a very rewarding experience for me emotion

I would like to share with you all, a great trading system I have been using.

Kinko Hyo has always been a great visual guide to the market for the traders.

I shall not go into the great details of ichimoku. You can use IchiWiki to see how the ichimoku is constru

Success in trading comes to those, who are patient and wait for the right price at the right time to ente

The trading system, am explaing here requires you to wait for "right price at the right time"

Rewards are great, if you learn to be patient. This system can make you thousands of pips in a month. Y

Success rate is about 90% (may be more, there are hardly any losing trades!!).

I use this system only on Daily Charts. (May be it works on hourly but I haven't tried).

So, here it goes:

Pair: Any currency pair.

Time Period: Daily (I use GMT for market open/close)


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Tenkan Sen : Green

Kijun Sen : Red

Chikou Span (Lagging Line) : Purple

Cloud : Blue

Entry Signal:

To SELL:

Condition 1: Tenkan Sen below Kijun Sen.

Condition 2: Chikou Span below the Price Line.

Condition 3: Current Price below the Cloud.

To BUY:

Condition 1: Tenkan Sen above Kijun Sen.

Condition 2: Chikou Span above the Price Line.

Condition 3: Current Price above the Cloud.

As soon as ALL 3 conditions are satisfied, enter into the position at the open of next candle. Use 2 lots t

EXIT:

To exit, we use Chikou Span (the lagging line).

Mark supports and resistance on the Chikou Span line, just as you would do for the price line.

For LONG position: The support on Chikou Span right below the price you enter is your STOP LOSS level.

The resistance on Chikou Span right above the price you enter is your TAKE PROFIT level.

And vice versa, for SHORT position.

For example, in the chart attached, you can see 1.3985 as my profit target on EUR long position. And, 1.

If your stop loss level is reached (which is very unlikwly), get out of your 2 lots.

If you take profit level is reached, take out 1 lot and let the other lot run with a trailing stop loss.

As you can see the EUR chart attached, after giving the ENTRY signal at 1.3712, the price after hitting fir

Well, this is my simple trading system

Everyday, I scan all the currency pairs for this formation on daily charts and enter a position with above

Only last week, I entered EUR/USD ; USD/CHF and an asian currency USD/SGD, all 3 pairs earning me th


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I would appreciate any feedback or questions about this system

Also any suggestions to improve the system are welcome.

I have also started updating all trades that I enter based on Ichimoku Trading System on MeetPips.com
http://www.meetpips.com/http://www.meetpips.com/


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ow. A strong sell signal occurs when the opposite occurs. The signals must be above the Kumo.

elow. A normal sell signal occurs when the opposite occurs. The signals must be within the Kumo.

. A weak sell signal occurs when the opposite occurs. The signals must be below the Kumo.

. Strength is shown to be with the buyers when the opposite is true.

o. If the price is entering the Kumo from below, then the price is at a resistance level. If the price is fallin

mo. If the price stays below the Kumo, then there is a downward trend (bearish). Alternatively, if the pr

d. The Japanese term Ichimoku means instant view or one glance, Kinko is the equivalent of e

dicator was developed by Goichi Hosoda around 1969, and from that point forward Ichimoku Kinko Hyo

d Resistance Levels, and to generate signals of buying and selling. Remember this indicator works best o

ines, very similar to moving averages, are based upon high and low prices.

as the sum of maximum and minimum within this time, divided by two - (Highest high + lowest low) / 2

hest high + lowest low) / 2, calculated over the past 26 time periods.

he value of the second time interval (ORANGE) - (Tenkan-Sen + Kijun-Sen) / 2, plotted 26 time periods aifted forward by the value of the second time interval (Highest high + lowest low) / 2, calculated over th

riods behind. This green Chinkou Span shows the closing price of the current candle shifted backwards

The two Senkou Span (leading) lines are pushed forward in time to represent past support and resistan

e second support level;

the second level;

margins form the support and resistance levels.

igher than this indicator, the prices will probably continue to increase. When the price traverses this lin

exists. When it goes horizontally, it means that the market has come into the channel.

ically a crossing of the Tenkan Sen above the Kijun Sen is bullish and a crossing of the Tenkan Sen below


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Sen crossing the relative position of todays price against that of 26 periods ago. That determines the st

ijun Sen is about to cross the Tenkan Sen, while Chikou Span is well above the 26 sessions ago price. A cl

hinkou Span line traverses the price chart in the top-down direction it is a signal to sell.

ow. A strong sell signal occurs when the opposite occurs. The signals must be above the Kumo.

elow. A normal sell signal occurs when the opposite occurs. The signals must be within the Kumo.

. A weak sell signal occurs when the opposite occurs. The signals must be below the Kumo.

e. Strength is shown to be with the buyers when the opposite is true.

o. If the price is entering the Kumo from below, then the price is at a resistance level. If the price is falli

mo. If the price stays below the Kumo, then there is a downward trend (bearish). Alternatively, if the p

above the Kumo is a very strong signal. Similarly, a bearish cross below the Kumo is considered strong.

on this site for this wonderful system I thought I'll take some time to explain everyone about Ichimoku

quite unique and might contradict with the usual Ichimoku concepts you have learned on the other we

hould try improving it by keeping the innovation alive. Secondly, I've been privileged to have worked wit

try giving it a chance.

'Kinko 'balance' and Hyo 'chart.' Thus the full translation could best be described as 'one glance balance


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market. Following are the key components:

t and historical price action. It behaves in much the same way as simple support and resistance by creat

lotted 26 time periods ahead of the current price action.

en over the past 44 time periods and is plotted 22 periods ahead.

ber of interesting features, such as:

The top of the Cloud is the first level of support and the bottom is the second level of support. From ex

at prices will manage a sustained break through it. The thinner the Cloud, and a break through has a m

the other way around. The Kumo (borders) crossover shows the Major Shift in Trends.

nd. Look ahead and see when, and at what price, it gets very thin. Similarly, if the Cloud is getting fatte

stem works. Good explanation in my opinion, however one major problem there. The guy explains all t

llish long term phase; conversely,

arish phase.- and vice versa.

cepts people have formed, I tend to disagree (based on personal experiences) with the following in par

e Parameters you've provided are daily numbers or a shorter timeframe. Since the price moves in wave

ng with the Default settings first and then try different combinations based on the Timeframe of your c

himoku does not work well in the Forex market as it was originally designed for Japanese market which

ku and especially its Kumo cloud, it actually helps you to detect the Trends and their strengths

adds a bit of extra help. So try it with other indicators and see what suits you most.

rent components comprising this technical indicator, stock traders must realize that simple is a relati


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ack period, serves as the signal line and the blue Tenkan-sen (SMA-9) serves as the trigger:

ry.

sell.

ach must be analysed within the context of the indicators other components, which provide a strength

yer between the two Senkou span lines. It serves as a dynamic and major support-resistance level, fully

above the Kumo. This means that the price action wont have to break through the Kumos resistance t

trong resistance level is in the price actions path.

hile beneath the Kumo, as the price action wont have to breach that strong support level to continue it

level is in the way of the move.

st and displayed as a lime green line. It serves as the trends barometre and a sort of magnet which dra

le following the close of the candle where the crossover takes place

ally as well as financially.

cted. Here, I try to explain the system I have been using with great success for past 2 years.

a position.

ou just have to wait for the right time.


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o enter the position.

.

3600 is the stop loss level

st target of 1.3985, went as high as 1.4700

mentioned rules.

ousands of pips in a matter of 2 days.


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Private Beta and you can find me there with the user name Dealing Roo


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g into the Kumo, then there is a support level.

ice stays above the Kumo, then there is an upward trend (bullish).

uilibrium or balance and Hyo means chart.

has become a permanent feature in Japanese trading rooms.

n weekly and daily charts, so it's better for long term analysis.

, calculated over the past nine time periods.

head.e past 52 time periods. And Plots 26 periods ahead.

y the value of the second time interval.

ce similar in concept to the idea that once established, support will continue to provide support until

e, the further trend changing is possible. Also, the crosses between the Kijun-sen BLUE and the Tenkan

the Kijun Sen is bearish.


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rength of the signals. The Chikou Span (lagging span) is todays price moved back 26 periods. If the Chik

ear cut, plus a candle opening inside the cloud, will give a bullish signal, though not the strongest one, a

g into the Kumo, then there is a support level.

rice stays above the Kumo, then there is an upward trend (bullish).

.

b sites or read in the books.

h some of the most advanced Ichimoku experts who happen to be Japanese themselves. All these facto

d chart.' Originally developed by Goichi Hosada pre WWII, a newspaper journalist (published in 1969) w


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ing formative barriers. The last two components of the Ichimoku application are:

perience, I have seen that these really do often work, but one has to give them a little leeway. Normally

ch better chance. So, Cloud is Cloud regardless of whether Span A or Span B is on top; the thickness is

and fatter, the chance of a reversal in trend lessens looking out into the future. It gives dates (Id say th

e above components and tells you that he has not drawn Chikou Span on this chart since its of no valu

icular:

s and follow certain patterns there is no reason why Ichimoku cant help you in shorter timeframes

oice. You'll find that one combination will work as the best in one timeframe while not so great in the o

works 26 days in a month unlike the forex market which works on a 24 hours model. I would say that it

e term and more analysis will be required to discern the best trading set-ups.


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level for the crossover and confirmation or otherwise for the market entry.

capable of stopping a trending move before it begins, and therefore its location relative to the crossove

o continue its move higher.

s move lower.

ws the price action converging toward itself, and therefore:


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roken when it becomes resistance. The colored area between the two Senkou , the cloud, not only d

Sen RED cross overs are signs of further continuation. A bullish signal is issued when the Tenkan Sen RE


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ou Span (todays price) is below that of 26 periods ago and a sell signal occurs, it is a stronger signal that

s 98.75 level, roof of the cloud, which should act as strong resistance in the pair or probable target.

rs have encouraged me to think out of the box.

ho wanted to develop an Uber-indicator that could provide the trader with various levels of support/re


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, I would also wait until the end of the day to see whether the closing price is below the Cloud, before e

hat matters.

ree or four days around the central

at all. Its actually quite contradictory as this particular happens to be one of the most important eleme

ther. So my personal advise is to try out as many settings and timeframes as possible

works as great on forex as it works on any other market, the reason is that it actually works on Price an


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r is significant:


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fines the trend but acts as support and resistance for price. A very basic precept is: if price is above the

crosses Kijun Sen BLUE from below. Conversely, a bearish signal is given when Tenkan Sen crosses Kiju


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it had been above the close of 26 periods ago. Equally the opposite is true for buy signals.

istance, entry/exit points, direction of the trend, and strength of the signal.


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ven beginning to consider whether the trend has reversed. The opposite is the case when candles are b

nt as it (in combination with Kumo cloud) basically helps us to determine the strenght of signals. Here is

d not on the market itself. Any financial product which follows the price movement could be used with I


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cloud then the trend is higher and vice versa.

Sen from above.


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low the Cloud, with this becoming the area of resistance. Very often the market seems to move throug

what it does:

Ichimoku (just like any other indicator)


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h the first support/resistance level and fails somewhere in the middle of the Cloud. When this happens


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we watch the shape of the daily candlesticks to see if they give a reversal signal.

i chimo ku basics

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