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Ichimoku 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 price and help the trader to figure out the most suitable time to enter or exit the trading 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: Base Line: Blue Line (Highest High + Lowest Low) / 2, for last 26 price periods

3) Chikou Span: Lagging Span: Green Color Line Today's closing 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 & B

Gold Analysis & Generating Signals

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

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

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

Ichimoku Kinko Hyo Technical 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 cross-over 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 cross-over that occurs above the clouds is regarded a weak sell signal.

Support & Resistance Zones

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

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

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

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

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