Ichimoku Kinko Hyo is a Swiss Army knife of an indicator which tries to do the whole lot on one chart - support/resistance levels, trend direction, and entry/exit points of varying strengths. The name is something like ‘one glance’ in Japanese.

Tenkan and Kijun lines
Tenkan or conversion line (red) - (Highest high + lowest low) / 2, calculated over the past 7 or 8 periods.
Kijun or base line (blue) - (Highest high + lowest low) / 2, calculated over the past 22 periods.

These are moving averages: Tenkan crossing from underneath the Kijun = bullish,
while crossing overhead = bearish,
(very similar to MACD crossover signals).

The cloud (Kumo), levels of support and resistance.
Senkou Span A (light brown) = (Tenkan + Kijun) / 2, plotted 26 periods ahead.
Senkou Span B (lilac) = (Highest high + lowest low) / 2, calculated over the last 44 periods, but plotted 22 periods ahead.

Chikou Span Light Green
Current price moved back 22 periods ago (sometimes 26).

Signal strength
Strong - A strong buy when the Tenkan crosses above the Kijun from below. A strong sell signal when the opposite happens. Both of these crosses must be above the Kumo.

Normal - A normal buy signal when the Tenkan crosses above the Kijun from below. A normal sell signal when the opposite. Within the Kumo.

Weak- A weak buy signal occurs when the Tenkan crosses above the Kijun-Sen from below or sell if the opposite but this time below the Kumo.

Overall strength - Strength is shown to be with the sellers if the Chikou Span is below the current price. Strength is shown to be with the buyers when the opposite is true.

Support/resistance - If the price enters the Kumo from below = resistance. If the price is drops into the Kumo = support.

Trends - Current price related to the cloud, Kumo. In very general terms if the price action is above the cloud, the trend is bullish - if below the cloud, a bearish overall trend.

3 Responses to “Forex chart indicator: Ichimoku Kinko Hyo”

1. Ichimoku Kinko Hyo says:

   November 16, 2008 at 5:21 pm

   the whole lot on one chart - support/resistance levels, trend direction, and entry/exit points of varying strengths. The name is something like ‘one glance’ in Japanese. (more…) [...]

   Reply
2. Forex chart indicator: Ichimoku Kinko Hyo · Forex-Trading.ExplainedOnline.Net says:

   November 16, 2008 at 5:38 pm

   [...] Original post by ForexPerform [...]

   Reply
3. Shah says:

   November 17, 2008 at 7:45 am

   Ichimoku is good to understand. The signals above the cloud are better thanb below cloud I think

   Reply