A Trading System Developed On A Rock-Solid Foundation
Ichimoku – A Japanese word meaning “one look.” Created and revealed in 1968, the Ichimoku was developed in a manner unlike most other technical indicators and chart applications. Usually formulated by statisticians or mathematicians in the industry, the indicator was developed, strangely enough, by a Tokyo newspaper writer named Goichi Hosoda and a handful of assistants running multiple calculations.
What they came up with is now used by many Japanese trading rooms because it offers multiple tests on the price action, creating higher probability trades. Although many novice traders are intimidated by the Ichimoku clouds’ appearance alone, the wealth of information it reveals is really quite simple to understand – once you know what to look for.
The Ichimoku indicator is used to measure medium timeframe momentum along with projected areas of support and resistance. The standard Ichimoku is comprised of five lines:
— This line is typically constructed by only using the highs and lows for the last seven to nine time periods. The resulting line is interpreted in the same manner as a short-term moving average.
— this line is created exactly the same as the Tenkan-sen except with longer time frames. Many traders use the crossing of the Kijun and Tenkan as points of entry and exit.
The cloud is made up of space between the Senkou Span A and Senkou Span B. Senkou Span A is calculated by subtracting : (Tenkan – Kijun)/2 and the Senkou Span B is calculated by (Highest High- Lowest Low)/2 over typically 52 periods.
Most people use the cloud to predict reversal in trend when the two cross. The trend is down when Senkou span A is below senkou span B.
— the Chikou span is created by plotting recent price movement 26 periods behind the latest closing price. Trend is determined based on where the closing price is relative to the Chikou Span. The trend is up when the Chikou span is above the closing prices and down when the indicator is below closing price. Many traders use the crossing of price above and below this span as an indication of imminent price change.
The genius of Ichimoku is that by plotting these lines on a chart provides simultaneous valuable information about momentum, support and resistance, to make profitable entries and exits.
We based our techniques on the Ichimoku Kinko Hyo and used it as a solid foundation to build upon. We have enhanced and improved the traditional charting technique with our proprietary methodology and developed a practical, simple-to-use Trading System that is Proven and Consistent.