Ichimoku Kinko Hyo
Type
Trend indicator
Short introduction
The Ichimoku Kinko Hyo (IKH) is an indicator developed in Japan. The IKH, often also called "Ichimoku", is a technical indicator based on Candlestick charts to improve the accuracy of price movement forecasts.
Statement
This indicator tries to provide information on trend direction and strength as well as support and resistance. The IKH consists of five lines, which are calculated from the mean value between the high and low of the last n periods.
Formula/calculation
Lines and elements of the IKH:
- Kijun Sen (standard line, mean value 26 periods)
- Chikou (delayed line, 26 periods delayed)
- Tenkan Sen (rotating line, average 9 periods)
- Senku span A (leading line A, mean of standard line and rotating line)
- Senku span B (leading line B, mean 52 periods)
- Kumo (cloud, 2 lines, 26 "future" periods based on senku ranges A and B)
The settings for the periods can be changed in the chart. For more information, see the section Edit indicators.
Interpretation
The IKH provides five signals and two filters, which can strengthen or weaken the signals. This makes the interpretation more complex, but the elaborate presentation allows for a deeper interpretation. In practice, the IKH is often used together with other indicators to determine trends and price targets.
The indicator's strategy is to only act on signals that are moving in the direction of an overarching trend. In addition to the direction, the trend strength should also be displayed.
Weighting of the signals:
- A strong buy signal is generated when the crossing of Kijun Sen and Tenkan Sen takes place above the cloud (Kumo).
- A neutral buy signal is generated when the crossing of Kijun Sen and Tenkan Sen takes place within the cloud (Kumo).
- A week buy signal is generated when the crossing of Kijun Sen and Tenkan Sen takes place below the cloud (Kumo).
The opposite applies to sell signals.
Default setting
- Period Kijun Sen: 26 periods
- Period Senku span B: 52 periods
- Tenkan period: 9 periods
