What is the Ichimoku Kinko Hyo?
The Ichimoku Kinko Hyo, or Ichimoku for short, is a technical indicator system used to assess the markets. Discovered by Goichi Hosoda, the Ichimoku Kinko Hyo indicator is a complex-looking indicator which is actually very easy to use, once you have an understanding of all parts and components of the indicator.
How it works?
Ichimoku cloud trading attempts to identify a probable direction of price. It helps the trader determine the most suitable time to enter and exit the market by providing you with the trend direction. It gives you reliable support and resistance levels and the strength of these market signals.
The Ichimoku indicator is made up of:
- Kumo (cloud)
- Senkou span A
- Senkou span B
- Tenkan sen (line)
- Kijun sen (line)
- Chikou Span
The trade example we shall feature here is simply a snapshot showing various trade setups for the daily chart of the AUDUSD, using the Ichimoku Kinko Hyo. We see the following:
- A bullish TK Cross (long trade)
- A Kumo break to the upside (long trade)
- Various bounces of price on the Tenkan line in an uptrend (long trade).