Ichimoku Kinko Hyo

[4xStar]

If you are working exclusively off the 3 hour charts, I'd prefer that you continue to do that in here. If that is the best timeframe, that is the one we should follow (apart from daily). In MT4 there is a simple way of making a 3 hour chart so it is not a problem.

I agree that knowledge of these charts could be a huge 'secret weapon' in forex TA .. as you said, at one point candlesticks were considered some sort of voodoo .. now they are essential to intelligent trading

Let's forcus on analyzing one pair, the GBP/JPY and on the 2 timeframes, 3 hour and daily. That should keep up busy & if IKH can help us unlock the secrets of the guppys next move, we will become very wealthy as well

Originally Posted by Andrewunknown

That's correct. I know we've discussed this before and the 4H would be much more helpful, even though there isn't much deviation. Nevertheless, the levels mentioned are still different. For now, I'll have to pop over to the WinOS side of my laptop to render the 4H version of whatever my analysis is, grab a screenshot or two and post it from there. No big deal.

More to come. I'm think of tossing some funds into an IKH-dedicated sub-account on which I'd take trades from 3H/4H/1D charts, and I could post any trades taken here for discussion.

IKH is a very powerful tool that people are intimidated by and/or wholly ignorant of in the West. The same could've been said about candlesticks before Steven Nison published his first book, but look at the pride of place given them by most technicians today. I'm not suggesting IKH is as elemental to trading as the visual representation of a data point (e.g. a 1H period); just that it is a "well-kept Japanese trading secret" about which most western technicians (even many institutional traders and analysts) know relatively little. Hopefully more people will develop some interest on the topic here!

[Andrewunknown]

Originally Posted by 4xStar

If you are working exclusively off the 3 hour charts, I'd prefer that you continue to do that in here. If that is the best timeframe, that is the one we should follow (apart from daily). In MT4 there is a simple way of making a 3 hour chart so it is not a problem.

I agree that knowledge of these charts could be a huge 'secret weapon' in forex TA .. as you said, at one point candlesticks were considered some sort of voodoo .. now they are essential to intelligent trading

Let's forcus on analyzing one pair, the GBP/JPY and on the 2 timeframes, 3 hour and daily. That should keep up busy & if IKH can help us unlock the secrets of the guppys next move, we will become very wealthy as well

Sounds like a good plan! Hopefully you're idea of very wealthy is the same as mine.

I'm going to quasi-take-the-night-off, but will go ahead and throw a 3H chart up with a few comments. Feel free to compare notes with your own take!

[Andrewunknown]

Some comments duplicated from the Guppy thread, with more IKH specific detail:

Price is probing the top of the cloud on the 3H chart @ 211.49 and finding some support, while Kijun-Sen provides support where the bottom of the cloud (Senkou Span-B) lies 15 pips lower @ 211.34. A 15 pip-thick cloud, though. With an Average True Range (ATR) above 300 pips, that's chicken feed. Note that price at the Chikou Span (the jagged yellow line that ends in the cloud 78 hours ago) is at the same level as the current price, which - like the very thin, laterally-ranging kumo here and immediately ahead - reflects the indecision in the market.

Some western analysis: Note, though, that the 1H (not pictured) 1400 ET candle created a massive bearish engulfing pattern, swallowing the advance from 211.68 begun 11 hours early at the London open. The retrace was shallow, taking in 38% (fib ratio!) of the decline (211.66 to 211.87 from 212.22), and now we've extended a bit further to the downside, just closing with a perfect neutral doji. Also, 50% fib retracement from the recent crest (213.66) to the subsequent trough (209.42) is 211.54 - a mere 4 pips from where the 2100 ET candle closed.

Price has moved back up a pittance, but finds resistance @ 211.68 (this level continues to emerge over and over again), where Tenkan-Sen lies at the moment. Remember 211.68 is the bottom of the range (211.68-212.10) we were stuck in yesterday. A close held above 212.10 would break the impasse; but bulls are not on solid ground until a base is established north of there.

[Andrewunknown]

Originally Posted by Andrewunknown

Price is probing the top of the cloud on the 3H chart @ 211.49 and finding some support, while Kijun-Sen provides support where the bottom of the cloud (Senkou Span-B) lies 15 pips lower @ 211.34. A 15 pip-thick cloud, though. With an Average True Range (ATR) above 300 pips, that's chicken feed. Note that price at the Chikou Span (the jagged yellow line that ends in the cloud 78 hours ago) is at the same level as the current price, which - like the very thin, laterally-ranging kumo here and immediately ahead - reflects the indecision in the market.

Not much change in the last 12 hours. Price is in the middle of the kumo, hinging around the 50% fib retracement mentioned above (211.54), finding support below the kumo at the 144 EMA: the 0900 ET candle's low: 211.16; the 1H 144 EMA: 211.17.

So far in the thread we haven't really discussed the predictive power of IKH, especially the cloud itself. I'll present a more detailed discussion of this a bit later. For the moment, let's look at the Tenkan-Sen line.

Take note of how Tenkan-Sen evolves and it's positioning relative to Kijun-Sen. TS sits @ 211.74. Of the last 9 periods (which is the data set TS is based on), the oldest closes are currently the highest: candles 1 and 2 (meaning 21 and 24 hours ago) both closed at ~211.89. This means that the 0900 and 1200 candles will push them off the board, with current candles 3-9 closing lower, between 211.68 and 211.57. If 0900 and 1200 close significantly lower (say, sub-211.50), this will drop TS about 20-30 pips, well into the kumo and closer to a bearish top-down cross over KS of medium strength. If they close around 211.68, this will still drop TS into the kumo, because the data points pushed out are 20 pips higher.

This will seem familiar: it is a classic example of moving average crossovers. But, this more powerful than, say, a 50/200 SMA cross, and that is because of the periodicity of the lines, how TS is calculated, and the cloud's function as a filter for these crosses.

I'll be back to post some charts and a bit more rambling later on!

Be careful out there.

[pakiestra]

Please forgive me my ignorance (I'm IKH newbie)
but on the last plot, I can see on 9th July (?time -I can't read it ) the Tenkan (?blue line) is crossing over Kijun line (within the cloud) and the current price (for corresponding crossover) stays above the cloud - I would consider it as relatively strong buying signal. I can't see continuation of the chikou line (that would add some strenght to this signal). I know the price may stay below chikou line taking away some byuing power. All in all I'm starting to believe in rrram's self-fulfilling guupie prophecy
Unless The Guupie Cloud will negate for a time being all rrram's spell
What's your take on it ?

[pakiestra]

Ohh, I would completely forget. Here you are daily IKH for beloved "She"
As there is another crossover up, price stays above "Up-cloud" -sun is shining. The only thing, the crossover is belowed chikou/lagging span-which can take some power away. I know this is long term and the range is huge as she loves to swing like crazy
Anyway daily chart (which is the best if you want to use IKH) supports the current rrram's prophecy.
Any thoughts ???

[pakiestra]

Here is a daily IKH for Her

[Andrewunknown]

Originally Posted by pakiestra

Please forgive me my ignorance (I'm IKH newbie)
but on the last plot, I can see on 9th July (?time -I can't read it ) the Tenkan (?blue line) is crossing over Kijun line (within the cloud) and the current price (for corresponding crossover) stays above the cloud - I would consider it as relatively strong buying signal. I can't see continuation of the chikou line (that would add some strenght to this signal). I know the price may stay below chikou line taking away some byuing power. All in all I'm starting to believe in rrram's self-fulfilling guupie prophecy
Unless The Guupie Cloud will negate for a time being all rrram's spell
What's your take on it ?

Hi Pakiestra,
That bottom-up cross occurred on the 0600 ET candle on 07/09/08. Because it occurred in the cloud, I would regard it as a neutral or medium strength cross, even while price is above the cloud. Price at the Chikou span was actually the same. These crosses are powerful, in any case, but there are certain elements that make them higher probability.

[Andrewunknown]

Originally Posted by pakiestra

As there is another crossover up, price stays above "Up-cloud" -sun is shining. The only thing, the crossover is belowed chikou/lagging span-which can take some power away. I know this is long term and the range is huge as she loves to swing like crazy
Anyway daily chart (which is the best if you want to use IKH) supports the current rrram's prophecy.
Any thoughts ???

Are you referring to the May 22-23 bottom-up cross? That's a great example of how powerful these crosses are for swing/immediate trading on the 1D. The long trade signaled there hasn't been negated or reversed, so I suppose in that sense rrram's perennial bullishness is validated; but you don't have to scan too far back on your 1D chart to find some excellent examples that contradict this. For now, the 1D reflects the rangebound chop well; and even though it can be read as bullish because it is above the cloud, above KS/just above TS and well above the Chikou span, the momentum of the last several months has clearly waned. Whether it will renew itself is now the question

One could use the 1D chart as a wide filter for when and when not to use rrram's method, if they wanted to. I do not and will not use the method, though, so I'll leave that topic to others.

And you're right: 1D is the best choice; but 3H/4H affords us more trading opportunities, and the quality of signal compared to the 1D is not really compromised by added market noise. 1H and below are inadvisable.

[pakiestra]

Hi Andrewunknown

Yep, I'm referring to the 22-23 bottom-up cross as a long term. So to say the sun is still over the cloud though cloud is getting thinner and thinner -so I agree. Besides there is a weak signal when Tenkan crosses Kijun to the down, it's over the cloud so I would consider it a weak signal.

However is difficult for me to agree that cross-over (doesn't matter the direction) within the Kumo is considered to be weak signal - for me that would be medium strenght. I'm a newbie so I would love to learn something new. Could you help me with this interpretation as this is where a great confusion starts for me. Which is weak, which is strong etc.
Cheers !