Ichimoku Kinko Hyo

"Ichimoku" means "one look" in Japanese, this technique was developed in the 1930s by Goichi Hosoda.

This technical indicator aims to be all-inclusive and builds on the candlestick charting approach. It is used to gauge momentum, identify points of support and resistance and define trends.

The main difference between how moving averages are plotted in Ichimoku as opposed to other methods is that Ichimoku's lines are constructed using the half-way point of the highs and lows instead of the candle's closing price. Furthermore Ichimoku factors in time as an additional element along with the price action.

Key Element:

  • Kumo The “cloud” which identifies the edges of current and future support and resistance points. A thicker cloud shows high volatility and strong support and resistance points.

Key calculations:

  • Tenkan-senTo show minor support and resistance levels
    (Highest Price + Lowest Price) / 2 for the last 9 periods
  • Kijun-sen To identify a trailing stop line
    (Highest Price + Lowest Price) / 2 for the last 26 periods
  • Senkou span A To form the edge of the cloud
    (Tenkan-sen + Kijun-sen) / 2 for the last 26 periods
  • Senkou span B To form other edge of the cloud
    (Highest Price + Lowest Price) / 2 for the last 52 periods
  • Chikou span Today’s close price project back against the last 26 periods.

The below chart shows an example of this indicator overlaying a candlestick chart