Ichimoku From Scratch
מעודכן
Hi, traders!
We hope you’ve found our previous article useful for your strategy. Even though PSAR is a good indicator, it can’t give accurate signals alone. We should combine it with some other indicators. One of the best companions for PSAR is Ichimoku. As you could guess, today we’ll speak about this extremely informative indicator.
This indicator shows us the direction of the trend, support and resistance levels and momentum of the price. From the first view, it seems too complicated but it’s a delusion. We’ll show you that it’s easy to understand its concepts and signals are well-defined. Ichimoku consists of 4 parts: conversion line, base line, lagging span, leading span A and leading span B.
Conversion line (Tenkan-sen)
Calculation: (highest high + lowest low)/2 for the last 9 periods.
It is primarily used as a signal line and a minor support/resistance 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. It is an indicator of the market trend. If the red line is moving up or down, it indicates that the market is trending. If it moves horizontally, it signals that the market is ranging.
Base line (Kijun-sen)
Calculation: (highest high + lowest low)/2 for the past 26 periods.
This is a confirmation line, a support/resistance line, and can be used as a trailing stop line. The Kijun Sen acts as an indicator of future price movement. If the price is higher than the blue line, it could continue to climb higher. If the price is below the blue line, it could keep dropping.
Leading (Senkou) span A
Calculation: (Tenkan-sen + kijun-sen)/2 plotted 26 periods ahead.
Also called leading span 1, this line forms one edge of the kumo or cloud.
If the price is above the Senkou span, the top line serves as the first support level while the bottom line serves as the second support level.
If the price is below the Senkou span, the bottom line forms the first resistance level while the top line is the second resistance level.
Leading (Senkou) span B
Calculation: (highest high + lowest low)/2 calculated over the past 52 time periods and plotted 26 periods ahead.
Also called leading span 2, this line forms the other edge of the Kumo.
Chikou span
Calculation: today's closing price projected back 26 days on the chart.
Also called the lagging span it is used as a support/resistance aid.
If the Chikou Span or the green line crosses the price in the bottom-up direction, that is a buy signal. If the green line crosses the price from the top-down, that is a sell signal.
We hope you’ve found our previous article useful for your strategy. Even though PSAR is a good indicator, it can’t give accurate signals alone. We should combine it with some other indicators. One of the best companions for PSAR is Ichimoku. As you could guess, today we’ll speak about this extremely informative indicator.
This indicator shows us the direction of the trend, support and resistance levels and momentum of the price. From the first view, it seems too complicated but it’s a delusion. We’ll show you that it’s easy to understand its concepts and signals are well-defined. Ichimoku consists of 4 parts: conversion line, base line, lagging span, leading span A and leading span B.
Conversion line (Tenkan-sen)
Calculation: (highest high + lowest low)/2 for the last 9 periods.
It is primarily used as a signal line and a minor support/resistance 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. It is an indicator of the market trend. If the red line is moving up or down, it indicates that the market is trending. If it moves horizontally, it signals that the market is ranging.
Base line (Kijun-sen)
Calculation: (highest high + lowest low)/2 for the past 26 periods.
This is a confirmation line, a support/resistance line, and can be used as a trailing stop line. The Kijun Sen acts as an indicator of future price movement. If the price is higher than the blue line, it could continue to climb higher. If the price is below the blue line, it could keep dropping.
Leading (Senkou) span A
Calculation: (Tenkan-sen + kijun-sen)/2 plotted 26 periods ahead.
Also called leading span 1, this line forms one edge of the kumo or cloud.
If the price is above the Senkou span, the top line serves as the first support level while the bottom line serves as the second support level.
If the price is below the Senkou span, the bottom line forms the first resistance level while the top line is the second resistance level.
Leading (Senkou) span B
Calculation: (highest high + lowest low)/2 calculated over the past 52 time periods and plotted 26 periods ahead.
Also called leading span 2, this line forms the other edge of the Kumo.
Chikou span
Calculation: today's closing price projected back 26 days on the chart.
Also called the lagging span it is used as a support/resistance aid.
If the Chikou Span or the green line crosses the price in the bottom-up direction, that is a buy signal. If the green line crosses the price from the top-down, that is a sell signal.
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The signals of IchimokuCrossovers
When the conversion line crosses the base line below and the Kumo cloud is above it’s a good signal to sell. When it crosses above and the Kumo cloud is below – to buy.
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When the conversion line crosses the base line below and the Kumo cloud is above it’s a good signal to sell. When it crosses above and the Kumo cloud is below – to buy.הערה
Kumo cloud breakoutWhen the price crosses the Kumo above and breaks its upper line, it’s bullish signal. If price crosses the cloud below, it’s bearish signal. NOTE: the larger is Kumo cloud, the higher probability of reversing the trend
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In conjunction with PSARHere we use Kumo clouds as dynamic levels of support and resistance. For long opportunities the price should be above the Kumo and PSAR dots bellow the price. For shorts, price should be below the Kumo and PSAR above the price. NOTE: NEVER get into position if the price crosses the Kumo.
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We hope you enjoy our educational articles and we want to make it more useful. Leave your comments with wishes.DISCLAMER: Information is provided only for educational purposes. Do your own study before taking any actions or decisions.
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