Ichimoku Kinko Hyo

Trading Systems
1

Irrashaimashe!
Hajimemashte!

No you don’t have to speak Japanese to be in here … I am just showing off since I spent 8 months in Japan … where I also tried in vain to learn the world’s most difficult language :D:D

But I loved the country & gained a huge respect for their sense of order and organization. So when I learned the Japanese have come up with a predictive trading pattern called Ichimoku Kinko Hyo (“Equilibrium chart at a glance”) I wanted to learn all about it.

It is not simple … but since it tends to be [I]predictive[/I] of future price movement, it should be worth the time & effort to learn. So I’m opening this thread for those who would like to study & discuss this pattern. If there are any people already experienced with it, please feel free to post here. The rest of us will listen & ask questions.

I found this page where you can get an intro to the Ichimoku:
www dot kumotrader dot com/ichimoku_wiki

There is an ichimoku indicator for MT4, you can google it or if anyone has a problem finding it, I can attach it in here.

Arrigato gozaimas!

2

Subb’ed for interest! Can’t wait to see what you have to teach.

3

[I]onegaishimasu 4xStar sensei![/I]

I was a teacher in Japan for a year right out of college, what a blast, love that country!

Back to forex though - I think Ichimoku is a useful technical indicator, especially on longer term time frames. One of the strongest signals is when you get Tenkan/Kijun crossover above (bullish) or below (bearish) the Kumo (cloud) - I made a reference to it in my post earier today:

http://forums.babypips.com/forextown/14015-usd-jpy-levels.html

gambatte kudasai!

4

doomo arrigato, but I am not the sensei for this, just a student myself. I’ve invited Andrew to join us as he knows quite a bit about these patterns. We have been following the G-Y a lot lately & siince the bullish Tenkan-Kijun cross on May 22 above the Kumo we’ve seen some nice upward movement in that pair as well.

I am also just starting to learn this pattern, so hopefully sensei Andrew-san will stop by to enlighten us all soon :smiley:

5

Hey, saw you mentioned this in RRRAM’s GBP/JPY Equity thread. Looked at it a little bit and it looks crazy! I’m sooo in on learning this thing! Also looked a little bit at the Gartley patterns you mentioned. What I read was somewhat vague on how to implement it. Mainly just how it sets up in general.
Should be good times! Can’t wait for Andrew to shed some light.

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heh? nihongo ga dekiru hito wa kono forum wo tsukatte iru n desu ka?
hajimemashi te!
ma- tonikaku, oshiete kurete arigatou gozaimasu 4xstar sensei!
Watashi no iu koto ga wakaru kamo shiremasen.

Hehe.

Thank you for your information. I’ve seen some about this before. I’m pretty new to FXtrading. Only a few months of study. And only a few days actually started trading.

I would love to hear anyone else’s info on this and their success with ichimoku kumo.

yoroshiku onegaishimasu

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toukika, your japanese is way ahead of mine :smiley: Need to find dictionary to look up
wo tsukatte and iu koto ga for starters…

Anyway Japanese fluency is not necessary to understand Ichimoku, although you will probably pick up a few words!

Well, I shall begin with a brief into to Ichimoku Kinko Hyo … it is actually meant to be a simple & quickly understood chart:

“[I]Ichimoku Kinko Hyo is a purpose-built trend trading charting system that has been successfully used in nearly every tradeable market. It is unique in many ways, but its primary strength is its use of multiple data points to give the trader a deeper, more comprehensive view into price action. This deeper view, and the fact that Ichimoku is a very visual system, enables the trader to quickly discern and filter “at a glance” the low-probability trading setups from those of higher probability. [/I]”

What attracted me to it is the fact that it is somewhat predictive and very few indicators are predictive … most are lagging. The IKH projects [I]forward [/I]in time to future probabilities.

OK … there are 5 components:

TENKAN SEN (“turning line”)

(HIGHEST HIGH + LOWEST LOW)/2 for the past 9 periods

KIJUN SEN (“standard line”)

(HIGHEST HIGH + LOWEST LOW)/2 for the past 26 periods

CHIKOU SPAN (“lagging line”)

CURRENT CLOSING PRICE time-shifted backwards (into the past) 26 periods

SENKOU SPAN A (“1st leading line”)

(TENKAN SEN + KIJUN SEN)/2 time-shifted forwards (into the future) 26 periods

SENKOU SPAN B (“2nd leading line”)

(HIGHEST HIGH + LOWEST LOW)/2 for the past 52 periods time-shifted forwards (into the future) 26 periods

The latter two delineate the top & bottomside of the infamous “kumo” or clouds that appear on the chart.

For starters, add the ichimoku indicator to a daily chart. The indicator is built into MT4 (I thought it had to be installed as a custom, but it is right there under oscillators).
Now what I did was adjust the colors … I made the lines thicker and changed the colors to more vibrant ones so I could easily distinguish the lines.

That is the first task … add the indicator (make it the ONLY indicator on your chart) and adjust the colors to suit.

Next we’ll get into what it all means… if anyone is already good at reading these charts, feel free to jump in!

8

Thanks for the info. Like I’ve said I’ve heard about it, and read something here or there, but I plan to look deeply into this and this is a good start for me.

As for the Japanese:
I grew up speaking it.
However, it’s still nowhere near as good as my English. I sometimes need a dictionary.

Toukika means speculator.

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After 8 months living there, and I speak 3 other languages, I came to the conclusion that is the ONLY way to learn japanese :smiley: It is definitely a challenge … can you read the kanji??

Andrew says he will be posting here over the weekend so we should start getting some good information … in the meantime, get those IKH charts up & colored the way you like them … take a look at the GBP/JPY for starters…
Look what happened since the Tenkan-Kijun bullish cross above the Kumo (cloud) on May 23 … nice spot to go long, des ka?

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Ok. I’m going to research some over the weekend.

Look what happened since the Tenkan-Kijun bullish cross above the Kumo (cloud) on May 23 … nice spot to go long, des ka?

sou deshou ne :slight_smile:

can you read the kanji

meh~
I can read Kana fine. As for Kanji, not very well, but I can read it a little bit (which is not very much).

11

The Chinkou span, the random line that gets produced with the price movement of the candles themselves. When that crossed the “price line” or previous candles,(its made 26 candles back or so) it produces a signal. Up through prices is a buy, down through is a sell. In meta trader its the green line. I cant ever be at the computer to catch the signal and the daily chart. But i use the clould to give me a great idea on where i can think about support and resistance.

12

With this post, my much-anticipated arrival has finally come to pass. Now, let the disappointment begin! :smiley:

First, a note on where you can learn about Ichimoku Kinko Hyo aside from this thread:

There are few resources available in English that discuss Ichimoku Kinko Hyo (IKH hereafter) in much detail. Among them are the Ichiwiki (as 4xStar has mentioned), which is the best online (and best free) resource - it is the Babypips of Ichimoku. Investopedia has a decent article on IKH, as well, but does nothing the Ichiwiki doesn’t. The single best work (recently recommended to me and acquired soon thereafter) available is Nicole Elliott’s book [I]Ichimoku Charts[/I].

The Ichiwiki is an adequate primer for discussion of IKH and does a fine job summarizing several common but highly effective ‘cross’ strategies. I would recommend reading at least the first two sections (better yet, all five) to orient yourself to the discussion to follow. Elliott’s monograph is for those who have assimilated the Ichiwiki material and wish to delve further.

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A couple of preliminary notes on how to approach the study of IKH:

  1. All indicators boil down to and are only, ultimately, so many representations of historic price data points, as we know. IKH is not an [I]indicator[/I]; it is a price overlay.

  2. This is important to realize because IKH is easily mis-conceptualized and can be intimidating based off of appearance alone. In fact, IKH is nothing other than support and resistance.

  3. The fundamental difference between IKH and the classic expression of S/R - and what can provide a verifiable edge if exploited correctly - is that IKH not only expresses the height and breadth of S/R, but also S/R depth. Depth goes beyond horizontal and diagonal lines to describe price volatility and price equilibrium. In short, there is information expressed through IKH about historic, present and future price behavior that is not available using line studies (including fibonacci, etc.) only. [I]Depth of price [/I], in my mind, is the thing so distinctive about IKH.

  4. IKH does not preclude use of other indicators or overlays. It can be used as a filter, to supplement other overlays, or as the sole technical component of a system.

  5. As I mentioned, IKH can seem overwhelming at first, or needlessly complicated. Maybe it looks revolting to those minimalists who prefer naked price. IKH is, at bottom, moving average data points manipulated according to a simple, specific logic. In other words, it is price. The melee IKH makes out of your chart is actually simple and elegant.

  6. IKH is most effective on medium to long TFs: 4H, 1D, 1W. Below 1H (which is pushing it), success will be severely limited. If someone finds a way to effectively use IKH on the 30M or less, don’t hesitate to chime in!

14

Before going any further, a little exercise:

A couple of charts are attached of the Guppy (GBP/JPY). The first is a chart slashed all across with fibonacci fan (and speed) lines. The second is IKH for the same period.

What similarities or differences do you note between what fibonacci and IKH are presenting?

Picture 2.jpg700×438 53.3 KB

Picture 1.jpg700×438 51.6 KB

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Ah, at last our sensei has arrived … welcome Andrew-san!

And we already have homework :smiley: :smiley:

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Brief note, drawn from the GBP/JPY equity building thread:

Ichimoku slapped the move into the kumo (cloud) to 211.20 back to the top of the cloud @ 211.46, but no higher. There’s some weak bearish signs here, but we’re still in a neutral-bullish zone relative to the cloud, so nothing to act on from IKH. Price did just close down inside the kumo, however - the bottom of which is at 210.70. If price closes outside the bottom of the kumo, back to the 209s.

More to come later. Anyone else want to add some commentary or projections based off of:

The top-down test of the kumo
The Tenkan/Kijun cross (albeit a weak signal above the kumo)
The top-down price cross over Kijun (again, weak)
The correlation between Senkou Span B and dynamic support @ 210.70

etc.

Read Ichiwiki for insight about what all this mean. Any thoughts, no matter how simple or rudimentary-seeming are fair game! We’re all here to learn.

17

Thanks to all for the work so far.:slight_smile:

I will be lurking until I can catch up enough to be an attribute to this thread.

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You know Japanese sources too?

I’m just trying to find as much info as I can.

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I’ll bet there are plenty but you would have to be able to read the kanji :eek:
I just tried googling ichimoku nihongo … but nothing relevant came up.

I found this article in SFO magazine about IKH:

www.gaincapital.com/files/sfo_dolan_200803.pdf

20

You tried googling it in japanese text? If you just type ichimoku it isn’t likely to pull up anything because it’s a normal word.
So I typed the name of the thread. In Japanese it’s 一目均衡表.
If you want to type it, the o’s are long, so the full ‘correct’ spelling is “Ichimoku kinkou hyou.”

I’ve got a extension for firefox that displays the pronunciation of the kanji (furigana) if it is in text format. It shows me how to read the kanji when I don’t know it.

Here is one source i have (it’s in japanese):
link

I am searching sources in both languages myself, but if anyone happens to have a link already to one, I’ll definitely bookmark it and put it on my list to read. It would likely be helpful. :smiley: