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Ichimoku Indicator

Ichimoku is a Japanese charting technique that was developed before by a Japanese newspaper writerjournalisteditor, with the pen name known of as Ichimoku Sanjin.

  • Ichimoku meaning: 'a glance' or 'one look'
  • Kinko means 'equilibrium' or 'balance'
  • Hyo is a Japanese term for "chart"

Thus, Ichimoku means, 'a glance at an equilibrium chart'. Ichimoku attempts to identify the likely direction of price & help the gold trader to figure out the most suitable time to enter or exit the market.

Ichimoku Kinko Hyo Gold Indicator - How Do I Use with Ichimoku Technical Indicator?

Calculation

This indicator consists of five lines drawn using the midpoints of previous highs and lows. Five lines are calculated as follows:

1) Tenkan-Sen: Conversion Line: Red Line (Highest High + Lowest Low) / 2, for last 9 price periods

2) Kijun-Sen: The Base Line: Blue Line (Highest High + Lowest Low) / 2, for last 26 price periods

3) Chikou Span: Lagging Span: Green Color Line Today's close price drawn 26 price periods behind

4) Senkou Span A: Leading Span A = (Tenkan Sen + Kijun Sen) / 2, plotted 26 price periods ahead

5) Senkou Span B: Leading Span-B: (Highest High + Lowest Low)--/--2[Highest High + Lowest Low]--/--2, for the past 52 price periods, drawn 26 price periods ahead

Kumo: Cloud: area between Senkou Span A and B

Gold Analysis and Generating Signals

Bullish trading signal - Tenkan-Sen crosses Kijun-Sen from below.

Bearish trading signal - Tenkan-Sen crosses the Kijun-Sen from above.

However, there are different levels of strength for the buy & sell trading signals generated.

Ichimoku Kinko Hyo Indicator - How to Use with Ichimoku Indicator

Analysis in XAUUSD Trading

Bullish cross-over signal forms above the Kumo (clouds),

Strong buy signal.

Bearish cross-over signal occurs below the Kumo (clouds),

Strong sell signal.

If a bullish/ bearish crossover signal takes place within the Kumo (clouds) it's considered a medium strength buy or sell signal.

A bullish cross-over that occurs below the clouds is considered a weak buy signal while a bearish crossover that occurs above the clouds is regarded a weak sell signal.

Support & Resistance Zones

Support & resistance zones can be predicted by the presence of Kumo (clouds). The Kumo can also be used to identify the current trend of the market.

  • If the price is above the Kumo, ruling market trend is said to be upward.
  • If the price is below Kumo, ruling market trend is said to be downwards.

Chikou Span or Lagging Span also is used to determine the power of the buy/sell signal.

  • If the Chikou Span indicator is below the closing price of the last 26 periods ago & a sell short sell signal is generated, then the power of the trend is downward, otherwise the trading signal is regarded to be a weak sell signal.
  • If there's a bullish signal & the Chikou Span is above the price of the last 26 periods ago, then the power of the trend is to the up side, otherwise it's considered to be a weak buy signal.

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