Ichimohku Indicator

The Ichimoku indicator was developed by a Japanese journalist named Goichi Hosoda. It has been a very popular trading tool in Japan and has also spread out over the world. The term means ‘Instant look at the balance chart’ and is a collection of different indicators that helps to identify trends by using multiple point moving averages that are based on the medium price of the candles sticks.

There are 5 different parts to this indicator

  • Tenkan sen (red line) – It is calculated by using the middle price for the last 9 candlestick highs-lows. This is an important line of Ichimoku because it gives you an early indication of the trend; there´s no trend when this line is horizontal but once it takes a direction it´s very likely that a trend has begun.
  • Kijun sen (blue line) – This line follows the last 26 candlesticks. Therefore, it is slower to react than the red line so it moves with a time lag. The blue line can be used in conjunction with the red line as a reinforcement indicator of the trend.
  • Senoku span A (orange interrupted edge of the cloud) – This forms one of the edges of the Kuomo cloud and is the fastest moving one, seen here crossing over the other; thus shifting the cloud at its squeezing point. It is calculated as a sum of the two sen lines, divided by two and then plotted 26 periods in advance.

  • Senoku span B (pink interrupted edge of the cloud) – This line is the lower edge of the cloud and it is calculated as the average of the high/low of the last 562 candlesticks. It is plotted 26 periods in advance as well, and that’s the reason the cloud stretches farther ahead of the last price candlestick.
  • Kuomo cloud (the gridded area) – This is the space between the two Senoku span lines and it is called the Kuomo cloud. This cloud changes shape; when the market trades in a horizontal range the cloud is thinner, and when the market is trendy the cloud widens, so the stronger the trend the greater the cloud width.

Ichimohku Settings

ichimoku indicator