Ichimoku Kinyo Hyo

You're probably thinking the same thing that I thought when I first saw this chart study, but don't worry, it's not as bad as it looks.

The Ichimoku Kinyo Hyo (Ichimoku' for short) chart study is made up of 4 separate indicators, which are all displayed at once. These four indicators are called:

1. Tenkan Sen
2. Kijun Sen
3. Chikou Sen
4. Senkou Span

The purpose of having 4 separate indicators all rolled into one is so that a trader can see what an asset/stock's price level has done, where it might go and also possible entry and exit points, without needing to cross-check it with 3 other indicators (although this is always advised!).

Parameters: Period 1 & 2.

For additional help on what the different parameters mean, that isn't included on this page, click here.

Ichimoku Kinyo Hyo

Here is an example of the Ichimoku Kinyo Hyo chart study (on a London Stock Exchange graph)

The 4 indicators:

The Ichimoku consists of many different indicators which work with one another, these are very similar to Moving Averages (although not identical) and are based on high and low prices. These indicators are:

1. Tenkan Sen: the "conversion line". Which is an average of the highest high and lowest low over 9 periods. (Red)
2. Kijun Sen: the "base line". This is similar to the Tenkan Sen but based over 26 periods. (Brown)
3. Chikou Sen: the lagging price. Also based 26 periods ago. (Pink)
4. Senkuo Span: the shaded area between two Senkuo lines.
   • The first Senkuo line is (Tenkan-Sen + Kijun-Sen) / 2, plotted 26 periods ahead.
   • The second Senkuo line is (Highest High + Lowest Low) / 2, for the past 52 periods, plotted 26 periods ahead.

The area between these not only defines the trend (green during an uptrend, and blue during a downtrend), but acts as support and resistance for prices. This leads the current time by 26 periods. (Green/blue shaded area).

The 4 indicators:

Here is an example of the 4 Ichimoku Kinyo Hyo indicators (on a London Stock Exchange graph)

Reading the study:

There are many indications Ichimoku helps with.

In general, when the price level is above the Senkuo Span (green/blue shaded area), there is an uptrend, and when the price is below the Senkuo Span, there is a downtrend. Tenkan Sen (red) crossing above the Kijun Sen (brown) is a buy signal, and below is a sell signal.

The positions of Tenkan Sen (red) and Kijun Sen (brown) with respect to the span is also important - if the price 26 periods ago is below the Chikou Span and a sell signal occurs, it is a stronger signal than if it had been above the close of 26 periods ago, and again vice versa.

Reading the study:

Here is an example of the Ichimoku Kinyo Hyo and the price line (of the London Stock Exchange), and what it may indicate

Time periods:

Ichimoku uses three key time periods for its input parameters: 9, 26, and 52. When Ichimoku was created back in the 1930s, a trading week was 6 days long. These parameters, thus, represent one and a half week, one month, and two months, respectively. Now that the trading week is 5 days, one may want to modify the parameters to 7, 22, and 44. You can do this by editing the study parameters to 7 and 22 - the third parameter is always double the second (ie 52 when it is 26, or 44 when it is 22).