Ichimoku Gold Indicator
Ichimoku is a Japanese charting technique that was developed before by a Japanese newspaper writer, with the pen name of Ichimoku Sanjin.
- Ichimoku means "a glance" or "one look"
- Kinko means "equilibrium" or "balance"
- Hyo is the Japanese word for "chart"
Thus, Ichimoku means, "a glance at an equilibrium chart". Ichimoku attempts to identify the likely direction of xauusd price and help the gold trader to determine the most suitable time to enter or exit the xauusd market.
This indicator consists of five lines drawn using the midpoints of previous highs and lows. The five lines are calculated as follows:
1) Tenkan-Sen; Conversion Line; Red Line (Highest High + Lowest Low) / 2, for the last 9 xauusd price periods
2) Kijun-Sen; Base Line; Blue Line (Highest High + Lowest Low) / 2, for the last 26 xauusd price periods
3) Chikou Span; Lagging Span; Green Line Today's closing xauusd price drawn 26 xauusd price periods behind
4) Senkou Span A; Leading Span A = (Tenkan-Sen + Kijun-Sen) / 2, drawn 26 xauusd price periods ahead
5) Senkou Span B; Leading Span B; (Highest High + Lowest Low) / 2, for the past 52 xauusd price periods, drawn 26 xauusd price periods ahead
Kumo; Cloud; area between Senkou Span A and B
XAUUSD Trading Analysis and Generating XAUUSD Trading Signals
Bullish signal- Tenkan-Sen crosses the Kijun-Sen from below.
Bearish signal- Tenkan-Sen crosses the Kijun-Sen from above.
However, there are different levels of strength for the buy and sell gold signals generated.
Bullish crossover signal occurs above the Kumo (clouds),
Very strong buy gold signal.
Bearish crossover signal occurs below the Kumo (clouds),
Very strong sell gold signal.
If a bullish/ bearish crossover signal takes place within the Kumo (clouds) it is considered a medium strength buy or sell gold signal.
A bullish crossover that occurs below the clouds is considered a weak buy gold signal while a bearish crossover that occurs above the clouds is considered a weak sell gold signal.
Support and Resistance Levels
Support and resistance levels can be predicted by the presence of Kumo (clouds). The Kumo can also be used to identify the current gold trend of the xauusd market.
- If xauusd price is above the Kumo, the prevailing market gold trend is said to be upwards.
- If xauusd price is below the Kumo, the prevailing market gold trend is said to be downwards.
The Chikou Span or Lagging Span is also used to determine the strength of the buy or sell gold signal.
- If the Chikou Span is below the closing xauusd price of the last 26 periods ago and a sell short signal is given, then the strength of the gold trend is downwards, otherwise the signal is considered to be a weak sell gold signal.
- If there is a bullish signal and the Chikou Span is above the xauusd price of the last 26 periods ago, then the strength of the gold trend is to the upside, otherwise it is considered to be a weak buy gold signal.