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Monday, September 1, 2014

Using the Ichimoku Cloud

The Ichimoku Kinko Hyo Chart,

A multi-faceted indicator designed to give support/resistance levels, trend direction, and entry/exit points of varying strengths. General theory behind this indicator states that if price action is above the cloud, the overall trend is bullish, and if below the cloud, the overall trend is bearish. There are also moving averages (the Tenkan and Kijun lines) which act like the MACD crossover signals with the Tenkan crossing from underneath the Kijun as a bullish signal, while crossing overhead giving a bearish signal.
Inchimoku Cloud, the Ichimoku Kinko Hyo Chart

Use

Commonly used in Japanese trading rooms, Ichimoku is often applied to establish the trend for a pair and detect trend breakouts. It is decent during range bound markets and like most indicators performance often improves when used over longer time frames.

History

The Ichimoku Cloud was originally called the ‘Ichimoku Kinko Hyo.’ Where Ichimoku means ‘one glance,’Kinko ‘balance’ and Hyo ‘chart.’ Thus the full translation could best be described as ‘one glance balanced chart.’ Originally developed by Goichi Hosada pre WWII, a newspaper journalist (published in 1969) who wanted to develop an Uber-indicator that could provide the trader with various levels of support/resistance, entry/exit points, direction of the trend, and strength of the signal.

Kumo, the Ichimoku Cloud

It later became known as the ‘Ichimoku Cloud’ since the most characteristic feature of the indicator is the cloud (Kumo), which is designed to represent various levels of support and resistance. In developing the cloud, Hosada realized support/resistance levels were not single lines drawn in the sand, since traders were often placing their trades at various distances from the support levels. Thus, since support was many layers deep from the offers/bids around the level, he created a cloud to represent the past levels of support/resistance. The cloud is composed of the two Senkou Span lines (A&B or 1&2) which are pushed forward in time, and when the area between them is shaded in, it makes a cloud-like shape. The most basic theory of this indicator is that if the price is above the cloud, the overall trend is bullish while below the cloud is bearish, and in the cloud is non-biased or unclear. Lastly, when the price is above the cloud, then the top of the cloud will act as a general support level, and when price is below, the cloud base will act as resistance. But remember the cloud has thickness, and thus resistance does as well, which by making these thicker reduces the risk of a false breakout.
Kumo Cloud, Ichimoku Kinko Hyo Chart

Tenkan & Kijun Lines

The indicator goes much further than this, with using two moving average lines; the Tenkan Line and the Kijun Line, which are 9 and 26 day moving averages (exponential). The Tenkan Line is really the conversion line which is when crosses the Kijun line from underneath, is indicative of a bullish signal. When it crosses over the Kijun line from above pointing downward, it becomes indicative of a bearish signal.
Kijun Line and Crossover, Ichimoku Kinko Hyo Chart

Chikou Span

There is also one last line called the Chikou Span, which is representative of today’s price moved back 26 periods ago. This is where the strength of the signal comes in. If you have a bearish signal (downward crossover of the Tenkan over the Kijun) and the Chikou Span is below the base, then the signal strength increases. If you have a bullish crossover (Tenkan crosses the Kijun from underneath) and the Chikou Span is above the cloud top, then the signal strength increases.
Chikou Span, Ichimoku Kinko Hyo Chart
There is one last metric for the strength of the signal and confirmation for your buy/sell signal. If the crossover of the two lines (Tenkan & Kijun) occurs above the cloud, then the bullish signal strength increases and is further confirmation. If the crossover occurs below the cloud, then the bearish signal intensifies and is further confirmation. Medium buy/sell signals occur when the crossover takes place in the cloud, and weak occurs when the bullish crossover is below the cloud, while a weak bearish signal occurs above the cloud.

Signal Types

Strong Bullish Signal
Strong Ichimoku Signal, Ichimoku Kinko Hyo Chart
Medium Bullish Signal
Medium Ichimoku Signal, Ichimoku Kinko Hyo Chart
Weak Bullish Signal 
Weak Ichimoku Signal, Ichimoku Kinko Hyo Chart
Clearly there are many different combinations of signals from Ichimoku, and each variable affects the strength of the signal. The numerous combinations will leave some discretion to the seasoned trader.

Formulas

 Tenkan Line; (highest high + lowest low)/2 calculated over last 9 periods.
 Kijun Line; (highest high + lowest low)/2 calculated over last 26 periods.
 Chikou Span; (most current closing price plotted 26 time periods back.
 Senkou Span A; (Tenkan line + Kijun Line)/2 plotted 26 time periods ahead
 Senkou Span B; (highest high + lowest low)/2 calculated over past 52 time periods, sent 26 periods ahead.
Other related search terms: Ichimoku Kinko Hyo, Tenkan-sen, Kijun-sen, Senkou Span A, Senkou Span B, Ichimoku Cloud
Source: www.fxwords.com  

Saturday, August 30, 2014

TSX composite index,canada elliott wave count

TSX Composite Index

TSX Composite Index,Canada

index is moving toward wave 5.
after wave 5 index can move sideways for a long time,as per long term wave counting degree.
more update soon....




Thursday, August 28, 2014

TURKEY ELLIOTT WAVE COUNT

ISE NATIONAL 100 INDEX


ELLIOTT WAVE REPORT/ANALYSIS ON TURKEY (ISE NATIONAL 100 INDEX).
WAVE B IS NEAR AN END. WAVE C WILL CORRECT FROM HERE.
ALTERNATIVE WAVE COUNT IS LABELED BELOW,CLICK ON CHART TO ENLARGE IT.
WAVE C CAN RETRACE HIGH AS H & S PATTERN LIKELY OCCUR.




    

Saturday, August 23, 2014

ise national elliott wave count



Ise national 100 (Turkey Index)

Moving in correction. keep eye on alternative count too.

click on chart to enlarge it.

Saturday, August 16, 2014

commodity channel index




Learn how to Trade commodity channel index

join our  free update on elliott wave study on world index,stock,currency,commodities and technical analysis tutorial through mail. enter your email id in our get latest update by mail box in right side on web page.

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Tuesday, August 12, 2014

ise national 100 index (turkey elliott wave count)

turkey index

ise national moving in correction at largere degree wave, sub wave b may retrace 61.8% of wave a.

wave a is near an end wave b will likely move soon in higher side.

more update soon...


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Saturday, August 9, 2014

china elliott wave count (sse composite index)



sse composite index moving in 5 wave advance. wave 4 will remain in corrective mode.
very soon new high will take place in china.

more update soon....

join our  free update on elliott wave study on world index,stock,currency,commodities and technical analysis tutorial through mail. enter your email id in our get latest update by mail box in right side on web page.

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