Ichimoku

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Ichimoku Kinko Hyo (IKH) ( Japanese 一目均衡表 , Ichimoku Kinkō-hyō ), usually just called Ichimoku , is a method of technical analysis that is based on candlestick charts and is intended to improve the accuracy of forecasting price movements.

history

Ichimoku Kinkō-hyō means something like "everything at a glance". The Japanese journalist Goichi Hosada ( 细田悟一 ) published this technical analysis method in 1968. He was also known as Ichimoku Sanjin , "Master (of) Ichimoku". He developed this indicator technology together with students for about 30 years before presenting it to the public. The Ichimoku has been used as an indicator in chart analysis to this day and is popular not only in Japan, but also in the rest of the world. The Ichimoku is used in stock trading as well as in the forex, bond, futures, commodities and options markets. The Ichimoku Kinkō-hyō was developed at a time when Saturday was still a trading day and a trading week consisted of six trading days. Due to today's 5-day week, there are users who are convinced that the original indicator settings would have to be adapted and the period duration would have to be modified to 7, 22, and 44.

However, back tests have shown that the adjustment of the period duration has almost no effect on the performance of the system.

description

The Ichimoku Kinko Hyo does not just consist of one line, like many other indicators in charting technology, but consists of five different indicator lines, each of which has a specific meaning. Therefore the Ichimoku Kinko Hyo counts not only as an indicator, but as a complete trend following system.

The elements of the Ichimoku chart are:

Tenkan-sen ( 転換線 ): ${\ displaystyle {\ tfrac {{\ text {highest high}} + {\ text {lowest low}}} {2}}}$ of the last 9 days (parameter 1). It is used primarily as a signal line and as a small support / resistance line.
Kijun-sen ( 基準線 ): ${\ displaystyle {\ tfrac {{\ text {highest high}} + {\ text {lowest low}}} {2}}}$ of the last 26 days (parameter 2). This is a confirmation line, support or resistance line and can be used as a trailing stop line.
Senkō ( 先行 ) span A: ${\ displaystyle {\ tfrac {{\ text {Tenkan-sen}} + {\ text {Kijun-Sen}}} {2}}}$ applied 26 days in advance. This line also forms an edge of the kumo or the cloud as a lead path 1.
Senkō span B: ${\ displaystyle {\ tfrac {{\ text {highest high}} + {\ text {lowest low}}} {2}}}$ calculated over the last 52 days (parameter 3) and drawn 26 days in advance. This line also forms the other edge of the kumo as pre-run line 2.
Kumo ( 雲 , literally 'cloud'): is the space between Senkō span A and B. The cloud edges identify current and potential future points of support and resistance.
Chikō ( 遅行 ) span: The closing prices are plotted on the chart with a delay of 26 days. Also known as the backward span and serves as an aid to finding support or resistance.

The strategy of this trend following system is to only trade the signals that are moving in the direction of the overarching trend. The special thing about the Ichimoku Kinko Hyo, however, is that in addition to the trend direction, the trend strength is also displayed. In this way, not only are buy and sell signals generated in strong, neutral or weak forms, but support and resistance zones are also displayed.

Weighting of the signals:

A strong buy-signal is given when the crossing of Kijun Sen and Tenkan Sen takes place above the cloud (Kumo).
A neutral buy-signal is given when the crossing of Kijun Sen and Tenkan Sen takes place within the cloud (Kumo).
A weak buy-signal is given when the crossing of Kijun Sen and Tenkan Sen takes place below the cloud (Kumo).

The reverse rules apply to sell signals.

application

The Ichimoku Kinko Hyo can either be used to better visualize a chart image or one of the five classic methods can be used:

Crossing of Tenkan Sen and Kijun Sen,
Crossing the course with Kijun Sen,
Breaking the course from the Kumo,
Color change of the kumo or crossing of the Senkou spanning or
Crossing the course with Chikou Span.

literature

D. Selzer-McKenzie: Ichimoku Cloud Chart Trading, ISBN 978-1-291-22343-9
S. Boyardan: Ichimoku Charts, ISBN 3864700248
K. Roller: Ichimoku-Trading: Better trading with the cloud chart indicator technique , ISBN 3898795551

Individual evidence

^ Fabian Marakovits: Cloud Trading: Stock exchange trading with Japanese cloud charts . Bachelor + Master Publication, 2014, ISBN 978-3-95684-373-0 ( google.de [accessed April 22, 2020]).
↑ Ichimoku explained - using the example of a DAX analysis. Retrieved April 22, 2020 .

[1] Fabian Marakovits: Cloud Trading: Stock exchange trading with Japanese cloud charts . Bachelor + Master Publication, 2014, ISBN 978-3-95684-373-0 ( google.de [accessed April 22, 2020]).

[2] Ichimoku explained - using the example of a DAX analysis. Retrieved April 22, 2020 .