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Ichimoku

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Sergey Golubev
Moderator
98417
Sergey Golubev  

I started to test some Ishimoku EA and suddenly recognized that it is necessary to have more information about it.

Thus we start this thread.

I will try to post everything about Ishimoku indicator here.

Sergey Golubev
Moderator
98417
Sergey Golubev  

This indicator is based on the 4 time intervals and because of that we may see the 5 different line:

- Tenkan-sen is the average value of the price for the first time interval calculated as sum of maximum and minimum for this period of time devided by 2;

- Kijun-sen is the average value of the price for the second time interval;

- Senkou Span A is the middle of interval between two above mentioned lines (Tenkan-sen and Kijun-sen) shifted onward on the value of the second time interval;

- Senkou Span B is the average value of the price for the third time interval shifted onward on the value of the second time interval;

- Chinkou Span is the closing price of the current candle shifted back on the value of the second time interval.

Files:
ish.gif 38 kb
Sergey Golubev
Moderator
98417
Sergey Golubev  

The space between Senkou lines is the cloud.

And we have 3 cases:

- if the price is inside the cloud (it means it is between Senkou lines) we have non trading market. In other words, we are not trading inside the cloud.

And Senkou lines are the support and resistance lines in this case.

- if the price is above the cloud the first Senkou line is the first support, and the second one is the second support respectively.

- if the price is below the cloud the first line (first from the price line) is the first resistance and the second one is the second resistance.

Sergey Golubev
Moderator
98417
Sergey Golubev  

If Chinkou Span line is crossing the price curve from below to upward we have the signal to buy, and from above to below - signal to sell.

Sergey Golubev
Moderator
98417
Sergey Golubev  

Kijun-sen is used as market trend indicator line (main line):

- if the price is above Kijun-sen line we have uptrend (most probably);

- if the price curve is crossing the Kijun-sen line the trend will be reversed (most probably as well).

Sergey Golubev
Moderator
98417
Sergey Golubev  

Tenkan-sen line is crossing Kijun-sen line:

- from up to down - sell signal;

- from down to up - buy signal.

Sergey Golubev
Moderator
98417
Sergey Golubev  

Tenkan-sen and Kijun-sen line are used to estimate the trendable and flat market. If one of the line is going by the horizontal way we have flat (non-trading zones).

Besides, Tenkan-sen is used as the reversed line to estimate the trend.

Sergey Golubev
Moderator
98417
Sergey Golubev  

Thus, the Ishimoku indicator looks like trading system: all the lines are the middle of the price range for the some period of time and we may estimate the bullish and bearish trend and so on. And all the lines are re-acted instantly on the creating the new max or minimum within period of time - no delay.

In other words the Ishimoru indicator is of the complex trading system.

Sergey Golubev
Moderator
98417
Sergey Golubev  

Well. But why we are not using this indicator right now?

Because some people say: "the settings of the indicator (9, 26, 52) are valid for the weekly charts only; and not for the forex; this indicator will not work on an other timeframes with the default settings; so it is necessary to have different settings for the different timeframes.

Sergey Golubev
Moderator
98417
Sergey Golubev  

But anyway there are many people who are using this indicator with some good results. And they are using exactly default settings (9, 26, 52).

On the next few posts we will describe more about it but I want to say that if you are trading using Ishimoru indicator you will have 1 trade for 2 weeks on D1 or 1 trade per 2 days in intra-day trading. And most probably you will be in profit in 4 of 5 cases (it means 75%).

Sergey Golubev
Moderator
98417
Sergey Golubev  

We said above that if Chinkou Span line is crossing the price curve from down to upward we have the signal to buy, and from up to down - signal to sell. But this Chinkou Span line should cross the line not in horizontal way. It should be at angle (45 or above is the ideal crossing).

Besides we mentioned about Tenkan-sen line is crossing Kijun-sen lines crossing: Tenkan-sen is crossing Kijun-sen from down to up - signal to buy (Gold Cross), sell signal is called as Dead Cross.

If the price curve crossed the Senkou Span B line (price candle should be closed before the line) we may open the order on the direction of the trend. But only in the case if Tenkan-sen line is not on horizontal level.

If Tenkan-sen line is on horizontal level - we have afloat market. We are not trading in this case.

And if we have Tenkan-sen, Kijun-sen and Senkou Span B lines are going in horizontal way above each other - it is reversed point. It means the price will change the direction soon.

If the price is inside the cloud together with horizontal Tenkan-sen - afloat market. Most of us will not trade in this case but some people are trying to trade inside the cloude understanding the cloud as the channel. It is possible only if the channel (cloud) is big enough.