Ichimoko Kinko Hyo is a unique trend trading charting system. The name may sound intimidating to those unfamiliar with Japanese and a quick glance at the formula makes it appear far more complex than it really is. Trading trend is what makes a fortune. This indicator is a very versatile indicator that can help you trade trends in both the forex as well as the stock market. It tells you almost everything about the trend in a visual manner.
Ichimoko Kumo Hyo Indicator is surprisingly not a well known indicator. However, it is considered to be a very good trend trading indicator by PRO traders who have used it in their trading. The primary strength of the Ichimoko Kinko Hyo System is that it uses multiple data points to give the trader a deeper and comprehensive picture of the price action.
This unique indicator was invented by a Japanese journalist Goichi Hosada in 1969. The Ichimoko Kumo or Cloud is the very core of this system. The Ichimoko Cloud computations are deceptively simple and when put together they synthesize data in an amazingly effective way.
Can you find any other indicator more versatile than this one? I don’t think so. You can use this indicator in stock trading as well as forex trading with ease. It’s not that complex. Let’s discuss it in more detail.
There are five plots in the Ichimoko Cloud;
1. Tenkan-sen also known as the Conversion Line
2. Baseline. This is also known as the Kijun-sen.
3. Leading Span A. This is also known as the Senkou Span A in Japanese.
4. Leading Span B also known as the Senkou Span B
5. Lagging Span also known as Chikou Span
This is how these five plots are calculated;
Conversion Line= (9-Period High+9-Period Low)/2
Baseline = (26-Period High+26-Period Low)/2
Leading Span A=(Conversion Line+Baseline)/2
Leading Span B=(52-Period High+52-Period Low)/2
Lagging Span =Close Plotted 26 days in the past.
Leading Span A and the Leading Span B are the two most important plots on the Ichimoko Kinko Hyo Indicator. This indicator can be easily used on the MT4 Platform. It works best on the daily and the weekly charts.