Ichimoku Kinko Hyo

Thinking about Ichimoku Kinko Hyo right？

Yes, youre still in the right place, the School of WikiFX and not in some Japanese pop or anime site. “Ichimoku Kinko Hyo” is not for Japanese “May the pips be with you.” but it can help you grab those pips even so.

Lets discuss about Ichimoku Kinko Hyo I'm details below:

The Ichimoku Kinko Hyo, or equilibrium chart, isolates higher probability trades in the forex market. It is new to the mainstream but has been rising in popularity among novice and experienced traders. Known for its applications in futures and equities, the Ichimoku shows more data points, which provide a more reliable price action. The application offers multiple tests and combines three indicators into one chart, allowing a trader to make the most informed decision. Learn how the Ichimoku works and how it can be applied to a trading strategy.

Ichimoku Kinko Hyo (IKH) is an indicator that gauges future price momentum and determines future areas of support and resistance.

It does all these 3 functions for you, great! But note that this indicator is mainly used on JPY pairs. In order to it add to your Japanese vocab, the word ichimoku can be translates to “a glance”, kinko means “equilibrium”, while hyo is Japanese for “chart.” Putting that all together, the phrase ichimoku kinko hyo stands for “a glance at a chart in equilibrium.”

Confused right!, thinking what does all that mean!. Relax, hopefully chart might make things easier to explain all.

That didn't help. A few more lines and this will resemble a seismograph.

Before you go off and call this rubbish, now let's break down the components of Ichimoku Kinko Hyo so it will easy for you to understand. But before we proceed, below are the List of things you should know first about this indicator:

• Ichimoku can be used in all time frames for any tradeable asset. (It was originally used to trade rice!)

• Ichimoku can be used in both rising and falling markets.

There are times also that you cannot use Ichimoku, lets see when:

When no clear trend exists.

Generally, when the market is trading sideways, choppy, that is when there are no trends. And it will be known to you if it is trendless when the price is oscillating on either side of the cloud. This sounds fabulous!

lets Now try to find out what each of the lines is for.

Kijun Sen (blue line): Also called the standard line or base line, this is calculated by averaging the highest high and the lowest low for the past 26 periods.

Tenkan Sen (red line): This is also known as the turning line and is derived by averaging the highest high and the lowest low for the past nine periods.

Chikou Span (green line): This is called the lagging line. It is todays closing price plotted 26 periods behind.

Senkou Span (orange lines): The first Senkou line is calculated by averaging the Tenkan Sen and the Kijun Sen and plotted 26 periods ahead.

The second Senkou line can be determine by averaging the highest high and the lowest low for the past 52 periods and plotted 26 periods ahead.

Hope it is clear？ Great, its not really necessary for you to remember how each of the lines is computed. Rather what is more essential for you is to know how to clarify these fancy lines.

How to Trade Using Ichimoku Kinko Hyo

Senkou

Now Lets take a look at the Senkou span first.

If the price superb the Senkou span, the top line act as the first support level while the bottom line serves as the second support level. When the price is below the Senkou span, the bottom line forms the first resistance level while the top line is the second resistance level. Cleared, right？

Kijun Sen

Meantime, the Kijun Sen serves as an indicator of future price movement. If the price is higher than the blue line, it could continue to climb higher. While if the price is below the blue line, it could keep falling.

Tenkan Sen

The Tenkan Sen is an indicator of the market trend. When the red line is moving up or down, it indicates that the market is trending. But If it moves horizontally, it signals that the market is ranging.

Chikou Span

Finally, if the Chikou Span or the green line intersect the price in the bottom-up direction, then it gives a buy signal. Otherwise when the green line intersect the price from the top-down, then it is a sell signal.

Below is that line-filled chart once more, but this time with the trade signals:

Surely it looks complicated at first but this babys got support and resistance levels, crossovers, oscillators, and trend indicators all in one go! Surprising, right？

As a trend following indicator, Ichimoku can be used in any market, in any timeframe. Irrespective of the market, Ichimoku emphasizes to trade in the direction of the trend and NOT against the trend.

Following this trends, Ichimoku can help you to avoid entering the wrong side of where the market. Okay! So far now we‘ve already covered an alphabet soup of indicators. Let’s see how we can put all of what you just learned together while trading.