ICHIMOKU

THEO-007

Banned
11 and 2002
16,308
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DOVE
solarobservation.blogspot.gr
PART 1
The term 'Ichimoku' means in Japanese a 'glance'. Ichimoku is considered to be a stand-alone system because additional markers are not necessary. include everything that most traders would need to make investment decisions. How can we use it for our trading staff?

trading_ichimoku_1_1.png


Ichimoku is a trading system originally developed by Japanese journalist Goichi Hosada β ???? as he was trying to find out the absolute marker that could provide a multitude of elements (analysis) at a glance. The term Ichimoku, literally, means 'a glance', in Japanese. Ichimoku is considered to be a stand-alone system since no additional indicators are required. include everything that most traders will need to make investment decisions.

The Ichimoku system is widely used in Japanese trading rooms, giving many the impression that the only methods of locating support and resistors make this system particularly suited to GBP / JPY, EUR / JPY, USD / JPY couples.
There are several elements of Ichimoku β ???? and can make the graph look rather complicated. In this article we are going to refer to the key points of Ichimoku and how traders can use them to analyze the markets.

Breakdown of the baseline

In the core of Ichimoku are the Tenkan-Sen and Kijun-Sen lines (referred to as Tenkan and Kijun). These two lines are the center of the Ichimoku system and can be treated as the incision separating the upward and downward trend.

Tenkan and Kijun are Mobile Medium Terms. Their only difference with respect to average averages is that they calculate the 'Average' price of each wax relative to the closing price (just like a simple or exponential moving average). This causes the line to appear irregularly (as opposed to the normalization achieved by an average calculated at closure).
Tenkan is usually the first item the trader will use when applying Ichimoku to a chart. This is a Moving Average 9 Period and we can consider it as the 'Start' of the b ???? since that is what means all the action that preceded Ichimoku takes place. When applying Ichimoku, I make this line green so it stands out and is very clear when a section is made.
Kijun is usually the second element used and is a KMON 26 period (exponent calculated on the average). We can consider Kijun as the baseline. When the line that Tenkan intersects upward and up the baseline, this can be seen as a market mark. When Tenkan intersects the baseline down, we can consider it as a sales mark.

The other indices within Ichimoku help us to determine the 'signal strength'.
For now, it's important to get acquainted with the Trigger / Base Line Crossover. If you are not comfortable with this section, apply it over to the chart and check with the existing chart data to understand how it works.

While you are going to learn the Trigger / Base Line Crossover, something that could help is to organize the pointer in an easy way that will clearly illustrate this section's graph. For the rest of this article, I will use 'green' for the Tenkan line and 'blue' for the Kijun line.

Once completed, the charts should look broadly similar to what you see below:

trading_ichimoku_1_2.png


Now that we have the Ichimoku fully implemented in our graphs, we can see the power of the intersection between the green and the blue line.
For now, ignore anything else on the chart except the Green (Trigger) and the Blue Line (Line Line) line.





For example, please note that in the chart below we have an upward incision occurring on 11 / 05 / 2009 in the GBP / JPY pair. I have marked the section in the graph where the trigger crosses the base line indicating the rise that can be started on the pair.

trading_ichimoku_1_4.png


Then we can move forward with time, with the keyboard arrow, seeing how this hypothetical market position could have evolved.


trading_ichimoku_1_5.png


After checking how this position could have evolved, we see that this upward splitting of the trigger line with the base line occurred immediately before an 1000 + pips rises to the GBP / JPY exchange rate.
Then you can move to the next section, which if you see the above graph, you will notice that the downward incision (the green line crosses from the top down the blue) took place after the 162,50 yarn was first approached. in the diagram, we can see how this hypothetical sales sign would have evolved.
In the chart below I have marked the point where the sales signal was given, after a downward cut. Note that this brand could not be as profitable as the previous one, but since the signal was given, the GBP / JPY exchange rate has fallen to 700 pips.

trading_ichimoku_1_6.png


The goal of this manual signal control is to be able to understand what happens when the Trigger Line intersects with the Base Line.
These are two of the most basic elements of Ichimoku and are the core of the system. Everything else included in Ichimoku helps us interpret the MARKET and SELL signals, indicating how powerful they can be.


If you have difficulty remembering which line is what, think about it as follows: b Tenkan = Trigger and Baseline = Blue.

PART 2

The part of Ichimoku that is completely absent from us when we apply it to our graphs is the area known as 'The Cloud' or 'Kumo' as it is called in Japanese. It is one of the areas of this indicator that makes the field of study particularly interesting. It is constantly changing, in extent and in width.

Kumo actually consists of two lines. The area between the two lines is shaded and is considered to be a moving range of support during upward stresses and resistance during downward stresses. Many traders will look at Kumo to place their stops for trades that have been placed from the Green cross with the Trigger / Base Line Crossover.
One of Kumo's most important tasks is that it can help traders with their ability to indicate the trend of a pair of currencies. When a pair has an upward trend making higher highs and higher lows, Kumo will act as a b remains below the price as the pair trades higher.

trading_ichimoku_2_1.png


And when a pair trades downwards making lower and lower lows, Kumo acts as a resistance remaining above the price as the pair moves lower. These seasons will appear on the RED graph by default (please see below)

trading_ichimoku_2_2.png


One of the most unique aspects for Kumo is that it is made in advance for 26 bouts. If you observe the current values ​​in a chart while applying Ichimoku you will notice that for 26 bouts ahead, Kumo has already been designed and awaits for the values. However, keep in mind that this has absolutely no predictive value.

trading_ichimoku_2_3.png

How to interpret Kumo

Now that we know what Kumo is, let's talk about how traders use it.
One of Kumo's most valuable features is its ability to show traders the potential for breaking the Trigger / Base line crossover. When this split occurs, traders will notice its location in relation to Kumo and will mark the mark according to its strength. Let's look at one example together.
In the GBP / USD chart below, there are three upward breaks, all marked with a red circle.
Let's look at each of the brands to see how traders generally interpret these breakdowns.

trading_ichimoku_2_4.png


At the first bull cross 1, observe that both the price and the decomposition are below the Kumo.

trading_ichimoku_2_5.png


When this split occurs, it is at the end of a downward trend. Traders are not sure whether the trend will change upward or whether the downward trend will prevail.
For this reason, traders often find it a weak signal. If the reversal occurs, the potential reward could be significant. But reversals do not always happen. Keeping the risks with stop orders is extremely important for these signals.
during the second upward break (bull cross 2), the split and the value is in Kumo as the split breaks down (Green breaks the Blue).

trading_ichimoku_2_6.png


Traders generally consider these divisions of Green with the Blue Line, which occur between Kumo, of moderate strength.
When the third upward split (Bull cross 3) occurs, with the price and split being above the Kumo, traders generally consider the signal to be very strong.

trading_ichimoku_2_7.png


The reason traders consider the 'bull cross 3' mark will be strong is because this is the AGREEMENT.
Remember, if the price is above the Kumo, traders see the pair as being upward. When the Green line crosses and below the Blue Line (which is a buy signal) AND the price is above the Kumo (positive environment), traders place PURCHASE commands considering that the breakdown of Green with the Trigger / Base line crossover) is very strong.
The exact opposite applies to SELL signals. Downward decays that occur under Kumo are generally considered "very powerful" because, once again, this is the deal. Rates below Kumo indicate RISK, and a POINT split according to the deal will make the trader think the signal he wants is 'very strong'. FLAT breaks occurring above Kumo are considered weak.
How to Use Signal Strength
Now that we know how to use Kumo when we receive a split between Green and Blue, let us discuss the best known ways in which traders try to take advantage of the 'power' of the signal produced by Ichimoku.
A well-known method for this, includes the size of trade that traders make.
When a weak signal is produced, traders can potentially consider opening a place for a 1 lot.
When a modest signal is generated, traders can consider opening a position for 2 lots.
When a strong signal is produced, traders can consider opening a place for 3 lots.
With this method, traders are committed to opening larger positions for signals that they feel are stronger.

Other traders may choose to take only 'very strong' signals, according to the AGREEMENT (UPDATES above Kumo, or FIVE DECAYS under KUMO).

Now that we know how to incorporate signal strength, we can do a back test in the same way we did in the previous lesson.
Going back the time and then going forward one candle at a time to observe the way the couple trades after each signal, from the above, produced.

The Art of Ichimoku, Part 3

In the two previous articles about Ichimoku, we saw the intersection of Tenkan and Kijun (referred to as the Trigger / Base Line crossover or section of the Green and Blue lines), as well as the 'Kumo' or 'The Cloud'.
In this piece we will incorporate the last element of this fascinating index β ???? known as Chinkou-Span, or 'The Filter'.

'Filter', as I call it, can work in a similar way to Kumo, that is, it can help us determine how 'possible' is the signal produced by the intersection of the Green and Blue lines.

Chinkou-Span (here referred to as 'Filter') is the current value depicting 26 periods before. This is. No scientific calculations or complicated maths are required, it is just a repeat of the current value depicted by 26 based on 26 periods in the past.

The usefulness of 'Filter' is to show where the current value is in relation to where 26 was before. If the current candle value is higher than the wax value before 26 periods, it is generally considered to be UPDATED (the value is higher than 26 periods before).

ichimoku1.png


If the current candle value is less than the wax value before 26 periods, it is generally considered BOTTOM (the value is lower than 26 periods before).

ichimoku2.png


Let's look at some examples to see how traders use 'The Filter' in their trading decisions.
In the example below, note that a UFO split has occurred over Kumo.

ichimoku3.png


If you remember from the previous lesson, we learned that this is a PURCHASE mark that traders could generally interpret as 'very powerful' because of the AGREEMENT between the section and the location that happened in relation to Kumo.

Now that we can integrate 'Filter' into strategy, we can notice that this brand is potentially much stronger than we might have originally thought about ???? which is confirmed by the fact that 'Filter' is above the price it had before 26 periods.

This indicates that the trend may be very strong upward and very favorable for POINTS positions.
Traders could interpret this brand as 'extremely powerful' as now Kumo and 'Filter' confirm the BUYER mark.

The exact opposite could be the case for SELLING. FLAT breaks of the Green with the Trigger / Base Line Crossovers under the Kumo become stronger with the confirmation that the 'Filter' is below the value it had before 26 periods.

Let's look at an example where 'Filter' could potentially protect us from getting into places that we may not want.

In the chart below, notice that there are two Green and Blue line breaks that occur above Kumo.

ichimoku4.png


Observe the first signal, which could be a FLUTAL signal as there is a POINT split.
This happens above the Kumo and the 'Filter' is also above the Kumo, indicating both UPDATE MARKET.

The BOTTOM signal we have received DOES NOT AGREE with the UPPER PURCHASE that we see from both Kumo and the 'Filter'.
And as you can see from the chart, choosing to be SELLERS at this point will not work ideally.

However, if you notice the second signal given a little later, you will see that we have an ADDITIONAL split.

ichimoku5.png


In the second signal, we have AGREEMENT: the ADVANCED split with KUMO's UPDATE condition (the value is above KUMO) and the 'FILTER' is above the value at the moment of the signal.
Traders could consider this PURCHASING mark as "extremely powerful" since there is an AGREEMENT between the brand, Kumo and the Filter.
Because the 'Filter' is made based on 26 bouts behind the current value, manual indexing can be challenging. However, a process often used by traders to get acquainted with 'Filter' is to test it in virtual demos, where depending on how powerful the mark is selecting lots too.

For example in UPDATES


Below Kumo and 'Filter' Down from 26 Periods - Low Sign (1 lot)
Split between Kumo, 'Filter' in Kumo b ???? Moderate signal (2 lots)
Above Kumo and 'Filter' above 26 b Very strong signal (3 lots)

In Flight Breaks


Above Kumo and 'Filter' Below the 26 b Weak signal (1 lot)
Breakdown that happens within Kumo, 'Filter' inside Kumo b ???? Moderate signal (2 lots)
Under the Kumo and 'Filter' under Kumo b ???? Very powerful (3 lots)


 
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