Hello everyone 
So far, the analysis has mainly focused on what the price has been doing in the (more or less) recent past. Now I’ll try to offer some thoughts regarding the present and the near future. As I mentioned before, in this post I’ll provide a brief analysis concerning the price and the Ichimoku lines.
In the image below, I’ve labeled each Ichimoku line and you can also see some colored rectangles. There are three rectangles because, out of the five Ichimoku lines, three are known as Han-ne lines (which literally means “half price”) - namely the Tenkan-Sen, the Kijun-Sen, and the Senkou Span B. These three lines share the same mathematical formula:
(highest high of the last X candles + lowest low of the last X candles) / 2
The Tenkan-Sen is calculated over a period of 9 candles, the Kijun-Sen over 26, and the Senkou Span B over 52. Now, do you understand the rectangles?
These lines move for two reasons:
- Either because the price reaches a new high or a new low (active movement);
- Or because a candle, which had been providing a high or a low used in the line’s calculation, falls out of the group of candles in the X-period window due to the passage of time (passive movement).
As you can see, for example, at the close of today’s candle and the subsequent opening of the new one, the leftmost candle within the light-blue rectangle indicated by a light-blue arrow because it represents the lowest low of the last 26 candles - will drop out of the calculation, causing the Kijun-Sen to shift. In this case, it will move imperceptibly, but in other situations the movement could be more significant.
That said, let’s look at what the chart is telling us right now and what it might indicate in the coming days.
So, the price continues to find support on the Tenkan-Sen.
All the Ichimoku lines - with the exception of the Chikou Span - act as dynamic supports and resistances. The Tenkan-Sen, if the price doesn’t update either the high or the low of the last 9 candles, is still likely to rise a bit in the coming days.
The Kijun-Sen will rise either because the price updates its high or because, as candles drop out of the calculation, new candles with rising lows are taken into account, since it’s very unlikely that the price will update the low for that period. Consequently, as the Kijun-Sen rises, the SSA line (which is the average of the Tenkan-Sen and the Kijun-Sen) will also move upward. Meanwhile, the SSB will either rise if the price updates its highs or continue flat. On the other hand, the Chikou Span is well above and far from the current price, which means that momentum is in favor of the bulls in the medium term (1).
So, to summarize, what is the likely scenario?
The price still has room to rise. In fact, it has not yet reached an extension exactly equal to that of previous moves, and we must also consider the excess tolerance relative to the equilibrium level (but I’ll explain that in more detail in the next post).
The Tenkan-Sen and the Kijun-Sen could continue to rise a bit and, in the meantime, move closer together. Remember what I mentioned in previous posts about equilibrium?
The SSA and SSB might also continue to rise slightly together, or they could diverge (with the SSA rising while the SSB remains flat). Such divergence would result in a thickening of the Kumo (the resistance area between the SSA and the SSB), which could precede a potential retracement or consolidation of the price - albeit it could take some time to occur; however, this remains compatible with the scenario outlined so far.
For now, I’ll stop here. We’ll see what happens tomorrow. If possible, I’ll try to include some thoughts incorporating time theory.
Thank you and have a good evening.
(1) The Chikou Span is nothing more than the current price (to be precise, it connects the closing prices of individual candles), shifted 26 periods back. It’s essentially a momentum indicator. The mathematical formula for momentum relates a price change to the time over which that change occurred. The Chikou Span does exactly that, comparing the current price with the price from 26 periods ago.