Unlocking the Power of Ichimoku Kinko Hyo Comprehensive Guide

Unlocking the Power of Ichimoku Kinko Hyo Comprehensive Guide

Author: Michael view: 50 Update: 10/11/2023 Downloads: 0

Ichimoku Kinko Hyo, also known as Ichimoku cloud chart, is a complex yet powerful technical indicator used to analyze financial markets. It was developed by Japanese journalist and market analyst Goichi Hosoda in the early 20th century and has become popular in recent years. In this article, we will learn about Ichimoku Kinko Hyo and how to use it to make smart trading decisions.

Ichimoku Kinko Hyo

Unlocking the Power of Ichimoku Kinko Hyo Comprehensive Guide

Ichimoku Kinko Hyo is a technical analysis tool used to identify market trends, support and resistance, and buy and sell signals. The name “Ichimoku Kinko Hyo” means “balance cloud chart” in Japanese, which reflects the complexity and multidimensionality of this indicator.

The Ichimoku cloud chart consists of many different lines, each representing a different aspect of the price movement. The most important lines are Tenkan-sen, Kijun-sen, Chikou Span and Kumo.

Tenkan-sen (conversion line)

Tenkan-sen is the moving average of the highest and lowest of the previous 9 periods. It is plotted as a diagonal line on a chart and acts as a moving average to determine the short-term trend of the market.

Kijun-sen (baseline)

Kijun-sen is the moving average of the highs and lows of the previous 26 periods. It is also plotted as a diagonal line on the chart and acts as a moving average to determine the long-term trend of the market.

Chikou Span (late line)

Chikou Span is the closing price of the past 26 periods plotted on the current chart. It is plotted as a straight line and acts as a moving average to determine the current trend of the market.

Kumo (cloud)

Kumo is the area between Tenkan-sen and Kijun-sen called the cloud. It can be used as support and resistance. Kumo has two parts: Senkou Span A and Senkou Span B.

Senkou Span A (cloud A)

Senkou Span A is a moving average of Tenkan-sen and Kijun-sen calculated after 26 periods. It is plotted as a diagonal line on a chart and acts as a moving average to determine the long-term trend of the market.

Senkou Span B (cloud B)

Senkou Span B is a moving average of Tenkan-sen and Kijun-sen calculated after 52 periods. It is also plotted as a diagonal line on the chart and acts as a moving average to determine the long-term trend of the market.

Ichimoku Kinko Hyo Trading Strategy

Unlocking the Power of Ichimoku Kinko Hyo Comprehensive Guide

There are many ways to use Ichimoku Kinko Hyo in trading, however, one of the most popular is using the Kumo cloud signals and the Tenkan-sen and Kijun-sen lines.

When the Kumo cloud is above the current price, the market is considered to be in an uptrend. Conversely, when the Kumo cloud is below the current price, the market is considered to be in a downtrend. This can be confirmed by examining the price’s position relative to the Tenkan-sen and Kijun-sen lines.

If the price is above both of these lines, the market is considered to be in a strong uptrend. If the price is below both of these lines, the market is considered to be in a strong downtrend. In case the price is between these two lines, the market is considered to be in an accumulation phase or price fluctuation.

A buy signal is confirmed when the price crosses above the Kumo cloud from bottom to top and the Chikou Span crosses above the current price line. Conversely, a sell signal is confirmed when the price crosses below the Kumo cloud from top to bottom and the Chikou Span crosses below the current price line.

Ichimoku Kinko Hyo Indicator MT4

Unlocking the Power of Ichimoku Kinko Hyo Comprehensive Guide

If you are using the MT4 trading platform, you can easily find and apply the Ichimoku Kinko Hyo indicator to your charts. To do this, you can follow these steps:

  1. Open the chart of the currency pair you want to trade.
  2. Right click on the chart and select “Indicator”.
  3. Search for “Ichimoku Kinko Hyo” in the list of indicators and select it.
  4. The indicator settings window will display and you can customize the parameters as you like.
  5. Click “OK” to apply the indicator to your chart.

An Ichimoku Kinko Hyo chart on MT4 will look like this:

Unlocking the Power of Ichimoku Kinko Hyo Comprehensive Guide

Ichimoku Kinko Hyo MT4

If you are looking for a version of the Ichimoku Kinko Hyo indicator for MT4 with more features and easier to use, you can refer to the “Ichimoku Kinko Hyo Advanced” version by developer FxCodeBase. This is a free version and is offered on the official MT4 website.

This version has additional features such as displaying buy and sell points on the chart, along with more detailed trading signals. Additionally, you can also customize the parameters to suit your own trading strategy.

Conclude

In this article, we learned about Ichimoku Kinko Hyo – a powerful but also complex technical analysis tool to learn and use. This indicator can help you identify market trends, support and resistance, and buy and sell signals in financial trading.

However, as with any other technical analysis tool, Ichimoku Kinko Hyo cannot make perfect trading decisions. You should use it in combination with other tools and strategies to make smart and effective trading decisions.

Hopefully this article has helped you better understand Ichimoku Kinko Hyo and how to use it in trading. Wishing you success in applying this indicator to your trading strategy!

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