The Ichimoku Kinko Hyo indicator is a technical market indicator developed by the Japanese analyst Goichi Hosoda Ichimoku in the 1930s. The Ichimoku indicator combines several approaches to market analysis and is designed to identify trends, support and resistance lines and generate signals for buying and selling.
The Ichimoku indicator represents five lines plotted on the price chart and the shaded gap between the two of them (Kumo cloud), as shown below. Each of the indicator lines has its own name and economic rationale for the construction.
Tips for how to use
The exchange analyst Ichimoku, who created the Ichimoku Kinko Hyo indicator, believed that one should enter only according to the signal that is supplied by the Chikou Span line, setting Stoploss outside the cloud border, in the opposite direction from the entrance.
Example: if the trade is conducted inside the cloud in the direction from the bottom up, then Stoploss is set under the lower border of the cloud, and, conversely, above the upper border, if the trade is conducted from top to bottom.
It is believed that the most powerful indicator on Forex is the signal given by the Ichimoku indicator first on the four-hour charts and already after on the hour and minute charts.
Along with this, the breakdown signal by a graph of such a line as Senkou Span B is considered the strongest. Next is the Chikou Span, and only after that are equal in strength - the signal of three lines, the “dead” and “golden” cross. As a result, we have an excellent indicator, which gives the probability of a correct forecast, equal to 65 percent, which is perhaps quite good, given the instability and volatility of the financial market.
When applied correctly, the Ichimoku indicator is a fairly powerful tool for predicting price movements. The author himself and the creator of the indicator recommended analyzing the signals supplied by his indicator in close connection with the information obtained during the analysis of the candlestick chart.
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