EURUSD 1.1693 USDJPY 111.40 USDCAD 1.2486 EURCZK 26.029 USDCZK 22.256 EURPLN 4.2511 USDPLN 3.6357
EURUSD 1.1693 USDJPY 111.40 USDCAD 1.2486 EURCZK 26.029 USDCZK 22.256 EURPLN 4.2511 USDPLN 3.6357

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Ichimoku Kinko Hyo is a fancy and exotic indicator that identifies market trend and its possible reversals

Rule of thumb

Ichimoku indicator drafted on a chart may seem to be quite confusing at  first glance

 

However, with little practice it may provide a complex overview of what the current market situation is

Ichimoku is the Japanese word for “one look”, and so this charting technique tries to give the trader a more in-depth analysis of prices without the need  for additional indicators. The Ichimoku Kinko Hyo combines five lines: Tenkan-sen, Kijun-sen, senkou span A, senkou span B and chikou span.

 

Ichimoku kinko hyo, trend, indicator, explanation

 

The Tenkan-sen is the calculated middle point from the highest high and the lowest low over nine periods. It may be interpreted as a standard short-term moving average.

 

The Kijun-Sen is a rather medium-term line, calculated as the difference of the lowest low from the highest high, divided by two. The formula is identical to the one for the
Tenkan-Sen, but the difference is the time considered. While the Tenkan-Sen is a short-term indicator the Kijun-Sen uses longer periods for calculation.

 

The Senkou Span A is an indicator in the Ichimoku Kinko Hyo, and calculates the mid-point from Tenkan-Sen and the Kinjun-Sen. It is used to indicate the resistance and support lines, and is always plotted together with the Senkou span B. Together, these two lines may indicate  future movement of prices, or more importantly the crossing of these two lines indicate shifts in price trends. With Senkou span A being above or below the Senkou span B, it will indicate an upward trend or respectively a downward trend. The Senkou Span B is considered to be the slowest moving component of this indicator because the number of periods used for calculation is the longest, e.g. 52.

 

The last component of the Ichimoku Kinko Hyo is the Chikou span. It is created by plotting a recent closing price, 26 periods ago. It works as a “lagging system”, where the current chart is changed to a line chart and “shifted” to the left by 26 periods.  

 

How to use it with MetaTrader 5:

  • Go to Insert - Indicators - Trend - Ichimoku Kinko Hyo.
  • In the pop-box indicate the adequate periods for Tenkan-Sen line (short-term), Kijun-Sen (medium-term), and Senkou span B (long-term). The default values are 9, 26, and 52.
  • Ichimoku Kinko Hyo indicator will be created automatically for you by MetaTrader 5 and presented in the same chart where prices are.

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