Ichimoku Kinko Hyo (overview of balance) is a technical tool for complex analysis created in 1968 by Goichi Hosoda, a columnist in Tokyo. The concept of this indicator was to immediately provide the current mood, momentum, and strength of the trend by analyzing the components of Ichimoku and the cost in terms of the interaction between them. This interaction is a cyclical type associated with the development of the group dynamics of people.
How to Use Ichimoku Indicator in Trading
Ichimoku Indicator consists of five lines, and it serves as flexible support or resistance levels. Their intersection can be used as secondary signals.
- Tenkan-sen (Conversion Line, Blue)
- Kijun-sen (Base Line, Red)
- Senkou Span A (Leading Span A, Green Line Area)
- Senkou Span B (Leading Span B, Red Line Area)
- Chikou Span (Lag Signal, Green Color)
- Kuma (Cloud) is a fundamental element of the pattern Ishimoku, and it represents the area of support or resistance. Its shape leads the interval A and B.
Determining the Stability of the Trend and Correction Level
- Cost Above the Clouds = The trend is moving upward.
- Cost Below the Clouds = The trend is moving downward.
- Cost in the Clouds = Sideways Trend
- Cloud Passing from Green to Red = There’s a correction in an uptrend.
- Cloud Changing from Red to Green = There’s a correction in a downtrend.