What is Ichimoku Kinko Hyo?
The Ichimoku Kinko Hyo, or Ichimoku, is a technical indicator that predicts momentum, future support, and resistance levels. The all-in-one technical indicator has five lines: tenkan-sen, kijun-sen, senkou span A, B, and chikou span.
Knowing Ichimoku Kinko Hyo
The Ichimoku Kinko Hyo indicator, which a Japanese newspaper writer developed, combines technical strategies for simple implementation and interpretation. The Japanese term “ichimoku” means “one look,” allowing traders to quickly assess momentum, support, and resistance on the chart.
New traders may find Ichimoku confusing, but it becomes more apparent with a grasp of its lines and their purpose.
Although designed as an all-in-one indicator, the Ichimoku indicator works best with other technical analysis methods.
Conclusion
Five main components comprise the Ichimoku indicator:
- To determine the tenkan-sen, or conversion line, you sum the highest and lowest lows over the prior nine periods and divide by two. This line is a crucial support, resistance level, and reversal indication.
- To compute the kijun-sen or baseline, you sum the highest high and lowest low from the last 26 periods and divide by two. The resultant line indicates critical support and resistance levels, confirms trend change, and serves as a trailing stop-loss point.
- The leading span A (senkou span A) is determined by summing the tenkan-sen and kijun-sen, dividing by two, and charting 26 periods ahead. The line forms one edge of the Kumo, or cloud, used to predict support and resistance.
- Leading span B (Senkou span B) is computed by summing the highest high and lowest low from the last 52 periods, dividing by two, and charting 26 periods forward. The opposite kumo edge is utilized to define future support and resistance regions.
- The Chikou Span, or trailing span, is the closing price of the current period measured 26 days ago on the chart. This line shows support and resistance locations.
