ichimokuKinkoHyo

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Ichimoku Kinko Hyo

Quick Descript ion

Ichimoku Kinko Hyo is a pursuccessfully used in nearly eprimary strength is its use ofcomprehensive view into prica very visual system, enableslow-probability trading setups

History

The charting system of Icnewspaper man named GoiWorld War II with the help ooptimum formulas and scesimulated back testing todayreleased to the public in 19Hosoda published his book w

Ichimoku Kinko Hyo has beepublished his book andcommodities, futures, and stdid not make its appearancelack of information in Englicategory of another "exotic" iearly 21st century, are weste

this charting system.

Equilibrium at a Glance

The name Ichimoku Kinko Haptly, describes the system a

While Ichimoku utilizeused individually, in istogether to form an igleaned "at a glanceprovide the Ichimoku

sentiment, momentum

Price action is constwhether it is in relativethat the market was aHe felt that human behmovement both awayinteractions. Each of town reflection of this e

ose-built trend trading charting system thery tradable market. It is unique in manymultiple data points to give the trader a daction. This deeper view, and the fact thathe trader to quickly discern and filter "at afrom those of higher probability.

imoku Kinko Hyo was developed byhi Hosoda. He began developing this syf numerous students that he hired to runarios - analogous to how we would uto test a trading system. The system itsel8, after more than twenty years of testin

hich included the final version of the syste

used extensively in Asian trading rooms sias been used successfully to tradecks. Even with such wild popularity in Asin the West until the 1990s and then, dueh on how to use it, it was mostly rele

dicator by the general trading public. Onlrn traders really beginning to understand t

yo, which translates to "Equilibrium chartd how it is to be used, as described below:

five separate lines or components, theylation, when making trading decisions, buttegrated "whole" picture of price action. Thus, a simple look at an Ichimokupractitioner with a nearly immediate unde

and strength of trend.

ntly measured or gauged from the peequilibrium or disequilibrium. Hosoda strondirect reflection of human group dynamicsavior could be described in terms of a confrom and back towards equilibrium in the five components that make up Ichimokuuilibrium or balance.

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at has beenays, but its

eeper, moreIchimoku isglance" the

Japanesestem beforethrough thee computerf was finally, when Mr..

nce Hosodacurrencies,

ia, Ichimokuto the utter

ated to thenow, in the

he power of

at a glance"

re not to berather used

that can behart shouldrstanding of

rspective ofgly believedor behavior.tant cyclicalir lives andprovides its


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The Ichimoku chart is compotogether to form the completcalculated is outlined below:

TENKAN SEN ("turning line")

(HIGHEST HIGH + LOWEST

Learn more

KIJUN SEN ("standard line")


Learn more

CHIKOU SPAN ("lagging line

CURRENT CLOSING PRICELearn more

SENKOU SPAN A ("1st leadi

(TENKAN SEN + KIJUN SEN

Learn more

SENKOU SPAN B ("2nd lead


(into the future) 26 periods

Learn more

The senkou span A and B dIchimoku "kumo" or cloud. Win the section "The kumo".The chart below (FIGURE I)components:

ed of five (5) separate indicator lines. Thee "Ichimoku picture". A summary of how

LOW)/2 for the past 9 periods


")

time-shifted backwards (into the past) 26

ng line")

)/2 time-shifted forwards (into the future) 2

ing line")

LOW)/2 for the past 52 periods time-shift

serve special mention here as they, togetcover the kumo and its myriad functions i

provides a visual representation of each

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e lines workeach line is

eriods

6 periods

d forwards

er, form themore detail

f these five


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FIG

Ichimoku Settings

As you can see in the Ichimhas one and sometimes twconsidered. After much reseathat the settings of 9, 26 andwith Ichimoku. He derived thebusiness month (which includ

half and the number 52 repre

The standard settings for an I

There is some debate arounvalid given that the standaSaturdays. In addition, inbusiness hours like the Forethat there may be more appras well as most other professof 9, 26, and 52 work extrem

The argument could be madtuned, integrated whole, chacould throw the system out of

Thus, for the purposes of deassumed that the standard se

RE I - Ichimoku Components

oku Components section above, each lindifferent settings based on the numbe

rch and back testing, Goichi Hosoda finall2 were the ideal settings for obtaining optinumber 26 from what was then the standaed Saturdays). The number 9 represents a

ents two months.

himoku Kinko Hyo chart are 9, 26, and 52.

whether or not these settings of 9, 26, anrd work month here in the West doeson-centralized markets that do not ke

x (which trades around the clock) someopriate settings. Nevertheless, we at Boerional Ichimoku traders, agree that the stanly well and do not need to be altered.

that, since Ichimoku Kinko Hyo functionsging the settings to something other than tbalance and introduce invalid signals.

scribing Ichimoku Kinko Hyo within this wttings are being used.

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calculationr of periodsdetermined

mum resultsrd Japaneseweek and a

d 52 are stillnot includep standardave positedma & Hunt,ard settings

as a finely- he standard

iki, it will be


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Ichimoku componen

Tenkan Sen

The Tenkan Sen, as we ha

calculated in the following ma

TENKAN SEN ("turning line")


While many may compare taverage (SMA), it is quite dprice's highest high and lowethe average of price extremeequilibrium than merely usinTenkan Sen will provide usis so prevalent in the Ichimok

Consider the chart in Figure I

FIGUR

As can be seen in the chart, tperiod SMA does not. This isof the highest high and lowesduring periods of price ranginrange via its flat aspect.

s

ve already mentioned in our Introductio

nner:


he Tenkan Sen to a simple 9 period siifferent in the sense that it measures thet low for the last 9 periods. Hosoda believ

s over a given period of time was a betterg an average of the closing price. Thisith our first foray into the key aspect of eqKinko Hyo charting system.

below:

I - Tenkan Sen vs. 9 Period SMA

e Tenkan Sen often exhibits "f lattening" wdue to the fact that the Tenkan Sen uses

t low rather than an average of the closingg, the Tenkan Sen will clearly show the mi

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section, is

ple movingaverage of

d that usingmeasure oftudy of theilibrium that

ereas the 9the averageprice. Thus,point of the


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When the Tenkan Sen is flatlast 9 periods.

It can also be seen how theprice support than does th

stayed above the Tenkan Sebroke below the SMA numerin which the Tenkan Sen imovements in price. On a beof resistance.

The angle of the Tenkan Senprice movements over the lasnearly vertical price rise overflatter Tenkan Sen will indicatime period.

The Tenkan Sen and the Kijuthe Tenkan Sen is the "fasteas opposed to the Kijun Sen.the Tenkan Sen, it is not as rof Ichimoku. Nevertheless,indication of a trend chanconfirmed by the other Ichimo

One of the primary uses of ththe Tenkan Sen is above theTenkan Sen is below the Kijulines is actually a trading sigour Ichimoku Trading Strategi

Discuss this!

Kijun Sen

The kijun Sen is calculated in

KIJUN SEN ("standard line


The Kijun Sen is one of themyriad applications. Like itsaverage of price's highest higframe of 26 periods as opposprovides us with all the infoframe.

, it essentially indicates a trendless condit

Tenkan Sen provides a much more accu9 period SMA. With only one exception,

in the three highlighted areas of the chartus times. This is due to the more conservs calculated, which makes it less reactiarish chart, the Tenkan Sen will likewise a

can also give us an idea of the relative m9 periods. A steeply angled Tenkan Sen

a short period of time or strong momentute lower momentum or no momentum ov

n Sen both measure the shorter-term trendt" given that it measures trend over the pas 26 periods. Thus, given the very short teliable an indicator of trend as many other

price breaching the Tenkan Sen can gie, though, like all Ichimoku signals, thiku components before making any trading

Tenkan Sen is vis--vis its relation to theKijun Sen, then that is a bullish signal. Lik

n Sen, then that is bearish. The crossoveral on its own, at topic that is covered in mes section.

the following manner:

)


true "workhorses" of Ichimoku Kinko Hybrother, the Tenkan Sen, the Kijun Sen mh and lowest low, though it does so over aed to the Tenkan sins 9 periods. The Tenkrmation the Tenkan Sen does, just on a

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ion over the

rate level ofprice action

, while pricetive mannerve to smallct as a level

mentum ofill indicate a, whereas ar that same

. Of the two,st 9 periodsrm nature ofcomponentse an earlyshould be

decision.

Kijun Sen. Ifewise, if theof these twoore detail in

and it haseasures thelonger time

an Sen thuslonger time


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Due to the longer time periodof short-term price sentiment,has been ranging, then the(price equilibrium) via its flator lowest low within the last

either angling up or down, rethe direction of the Kijun Seindicate the strength or mom

Price equilibrium is expresstenkan sen, given the longerrelied upon as a significant lareas in Figure II below).

FI

Price tends to move alternacyclical fashion due to the

Thus, when price momentumshort period of time, a certaikijun sen, attracting price baanalogy could be made betelectricity always seeks to rcase is the Kijun Sen andphenomenon is particularly eseen in Figure III below:

it measures, the Kijun Sen is a more reliastrength and equilibrium than the tenkanijun Sen will reflect the vertical midpointspect. Once price exceeds either the last

26 periods, however, the Kijun Sen will r

pectively. Thus, short-term trend can ben. In addition; the relative angle of the Kintum of the trend.

d even more accurately in the Kijun Senperiod of time it considers. Thus, the Kijunvel of price support and resistance (se

URE II - Kijun Sen Support

tely away from and back toward the Kijijun Sen.s strong expression of equilibriu

is extreme and price moves rapidly up or"rubber band" effect can be observed on

k towards itself and bringing it back to eqeen how price interacts with the Kijun Sturn to ground or zero potential. The "grprice will always seek to return to thatident when the Kijun Sen is flat or trendles

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ble indicatorsen. If pricef that rangehighest highflect that by

easured byjun Sen will

than in theSen can behighlighted

n Sen in am or stasis.

own over aprice by theilibrium. An

en and howund" in thislevel. This

s, as can be


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FIGURE I

Given the dynamics of the Kieffectively as both a low-risktactics are employed extensisen/kijun sen cross strategieTrading Strategies section.

Discuss this!

Chikou Span

The Chikou span is calculate

CHIKOU SPAN ("lagging line

CURRENT CLOSING PRICE

The Chikou Span representsshifting certain lines backwar

price action. In the Chikoubackwards by 26 periods.confusing, it becomes very chow today's price action comhelp determine trend direction

If the current close price (as26 periods ago, that would iaction to come, since price t

III - Kijun Sen "Rubber Band" Effect

un Sen outlined above, traders can use tpoint of entry as well as a solid stop lossely in both the kijun sen cross as well a

s which are covered in greater detail in

in the following manner:

")

time-shifted backwards (into the past) 26

one of Ichimoku's most unique features;s or forwards in order to gain a clearer p

pans case, the current closing price ishile the rationale behind this may at

lear once we consider that it allows us topares to the price action of 26 periods ag.

epicted by the Chikou Span) is lower thandicate that there is a potential for morends to follow trends. Conversely, if the cu

P a g e 7 o f 33

e Kijun Sen. These two

the tenkanur Ichimoku

eriods

hat of time- rspective of

time-shiftedfirst appearquickly see, which can

the price ofearish pricerrent closing


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price is above the price of 26more bullish price action to fo

Consider the charts in Figure

FIGURE IV

FIGURE V -

periods ago, that would then indicate thellow.

IV and V below:

- Chikou Span in Bullish Configuration

Chikou Span in Bearish Configuration

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ossibility for


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In addition to providing us witalso provides clear levels ofclosing prices. Ichimoku prapoints created by the Chikouanalysis and trading decision

FIGURE VI - Ch

Discuss this!

Senkou Span A

The Senkou Span A is calcul

SENKOU SPAN A ("1st leadi

(TENKAN SEN + KIJUN SEN

The Senkou Span A is best-kforming the kumo, or "IchimoHyo charting system. The Sthat are unique to Ichimoku. Irepresents the average of thitself a measure of equilibriuprior support and resistance lhe allowed the Ichimoku praresistance from 26 periods acurrent price action.

h another piece of the "trend puzzle", thesupport and resistance, given that it reprctitioners can thus draw horizontal linesspan to see these key levels and utilize t(see Figure VI below).

ikou Span Support and Resistance Levels

ted in the following manner:

ng line")

)/2 time-shifted forwards (into the future) 2

nown for its part, along with the Senkou Sku cloud" that is the foundation of the Ichinkou Span A is another one of the time-

n this case, it is shifted forwards by 26 perie Tenkan Sen and Kijun Sen, the Senko. Goichi Hosoda knew well that price tendvels, so by time-shifting this line forward btitioner to quickly see "at a glance" whereo (1 month ago on a Daily chart) reside co

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hikou spanesents prioracross the

hem in their

6 periods

an B line, inmoku Kinkoshifted linesods. Since it

Span A iss to respecty 26 periodssupport andmpared with


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While it is possible to trade oreal power comes in their co

Discuss this!

Senkou Span B

The Senkou Span B is calcul

SENKOU SPAN B ("2nd lead

(HIGHEST HIGH + LOWEST(into the future)26 periods

The Senkou Span B is best-kforming the kumo, or "IchimoHyo charting system. On itsterm view of equilibrium in th

only the last 26 periods in itsmeasures the average of thethen takes that measure andSpan A. In Hosoda's originrepresent price equilibriumcurrent price by one (1) montthis longer term measure ofto make informed trading deci

The Kumo

The Basics

The Kumo is the very "heartPerhaps the most immediatelJapanese) enables one to iand price's relationship to taspects of Ichimoku Kinkosupport and resistance as opby other charting systems. Tin which the market truly funsingle point on a chart, but rmarket dynamics.

The Kumo itself is comprisedB. Each of these two lines prform the complete view of lolines lies the Kumo "cloud" iprice equilibrium can make pr

f of the Senkou Span A and B lines on thbined dynamics in the kumo.

ted in the following manner:

ing line")

LOW)/2 for the past 52 periods time-shift

nown for its part, along with the Senkou Sku cloud" that is the foundation of the Ichiown, the Senkou Span B line represents

Ichimoku Kinko Hyo system. Rather than

calculation like the Senkou Span A, the sehighest high and lowest low for the past 5ime-shifts it forward by 26 periods, just likeal implementation, the Senkou Span Bor the prior two (2) month period, shifth. This convention allows Ichimoku practitiquilibrium ahead of current price action, alsions.

and soul" of the Ichimoku Kinko Hyo chary visible component of Ichimoku, the Kummediately distinguish the prevailing "big pat trend. The kumo is also one of theyo as it provides a deep, multi-dimensiosed to just a single, uni-dimensional levelis more encompassing view better represctions, where support and resistance isather areas that expand and contract dep

of two lines, the Senkou Span A and the Svides its own measure of equilibrium and tnger-term support and resistance. Betweeself, which is essentially a space of "no tice action unpredictable and volatile.

P a g e 10 o f 33

ir own, their

d forwards

an A line, inmoku Kinkothe longest-

considering

kou span B2 periods. Itthe Senkouwould thusd ahead ofners to see

lowing them

ting system.o ("cloud" inicture" trend

ost uniquenal view ofas providednts the wayot merely anding upon

enkou Spangether they

n these tworend" where


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Trading within the Kumo iscreates a high degree of unc

Discuss this!

A Better Measure of Su

As mentioned earlier, one ofa more reliable view of suppsystems. Rather than providcontracts with historical priceresistance. At times the Kumshort of eerie, as can be seenrespected the kumo boundari

FIGUR

The power of the Kumo becsupport and resistance theorand resistance via the Kumo.

In the chart for Figure II belotraditional resistance line atboth the down trend line andtraders would take this as aIchimoku practitioner, on thebelow the bottom edge of thextremely risky given the stro

ot a recommended practice, as its trenrtainty.

port and Resistance

he Kumos most unique aspects is its abilirt and resistance than that provided by oting a single level for S&R, the Kumo eaction to give a multi-dimensional view of

o's ability to forecast support and resistanin the chart below (Figure I) for USD/CAD,s on five separate occasions over a 30-da

E I - Kumo Support & Resistance

mes even more evident when we compay to Ichimoku's more comprehensive vie

, we have added a traditional down trend li1.1867 (B). Price managed to break andthe single resistance level at point C. Tratrong signal to go Long this pair at that pother hand, would take one look at price'sKumo and would know that going long at

ng resistance presented by the Kumo. Inde

Pa ge 11o f 33

less nature

y to provideher chartingxpands andsupport ande is nothingwhere pricespan.

e traditionalof support

e (A) and aclose aboveitional S&Rint. A savvylocation justthat point ised, price did


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bounce off of the Kumo anmost likely eradicated the lon

Frustrated by his last losing tr

go long, as he sees price breIchimoku trader only sees pria trendless area that makesaware that the top boundarymay present considerable rethe traditional S&R trader asafter meeting the Kumo bounstone nearly 500 pips.

The example given abovesupport and resistance givestraditional chartists do not ha

the most legitimate, high requality and reward. The traditrade doesn't turn into a head

FIGURE II - Tr

Price's Relat ionship to t

In its most basic interpretatiosignal since it indicates curreprice is trading below the Kuprice is trading within the k

dropped approximately 250 pips, whichposition of the traditional S&R trader.

ade, the traditional S&R trader spots anoth

k and close above the prior swing high ate trading in the middle of the kumo, whichfor uncertain conditions. The Ichimoku tr

of the Kumo, the Senkou Span B, is closeistance, so he again leaves this dubious lhe awaits a better trade opportunity. Loary and making a meager 50 pips, the pair

illustrates how Ichimoku's multi-dimensiothe Ichimoku practitioner an "inside view"e. This enables the Ichimoku practitioner t

ard trade opportunities and reject thoseional chartist is left to "hope" that their latfake - a shaky strategy, at best.

ditional S&R Theory vs. Ichimoku Kumo

he Kumo

, when price is trading above the kumo, tht price is higher than the historical averagemo that indicates that bearish sentiment iumo that indicates a loss of trend sinc

P a g e 12 o f 3 3

would have

er chance to

oint D. Thehe knows isader is alsoat hand andong trade toand behold,drops like a

nal view ofof S&R thatselect only

of dubiousst breakout

t is a bullish. Likewise, if

stronger. Ifthe space


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between the Kumo boundariThe informed Ichimoku practthe Kumo in order to get thperspective, the Ichimoku chthe correct side of the Kumo

their chosen execution timewithin the Kumo, then theythe Kumo.

Kumo Depth

As you will see upon studyinvary drastically. The depth othicker Kumo indicating highvolatility. To understand thislines that make up the Kumo,The senkou span A measure

"period" is between 9 andTenkan Sen and Kijun Senother hand, measures the avpast 52 periods. Thus, the Ssince it measures a shorter p

Consider the chart in Figure IIrange of 793 pips (from a higof this range is 1.2275 and ththen time-shifted forwards baction. The Senkou Span Aalready reflecting the move

angle and the gradually thinnactually continuing to move dto lower as it follows the pricprice continues to raise, the SSpan A will cross above the S

es is the ultimate expression of equilibriuitioner will normally first consult price's re

ir initial view on a chart's sentiment. Froartist will also always wait for price to situ(above for long trades and below for sho

frame before initiating any trades. If pricill wait to make any trades until it closes

an Ichimoku chart, the Kumo's depth or tf the kumo is an indication of market volr historical volatility and a thinner one indiphenomenon, we need to keep in mindthe senkou span A and the senkou span

s the average of the Tenkan Sen and kiju

6 periods, since those are the two perieasure, respectively. The senkou span B

erage of the highest high and lowest lownkou Span A is essentially the "faster" linriod of equilibrium.

I below. For the previous 52 periods, priceof 1.2672 to a low of 1.1879) The midpoint is thus the value of the Senkou Span B.26 periods so that it stays in front of

is more reactive to short-term price actionf price back up from its low of 1.1879 i

ing Kumo. The Senkou Span B, on the otwn as the highest high of the last 52 periocurve's move down from the original high

enkou Span A and B will switch places andenkou Span B in a so-called Kumo twist".

P a g e 13 o f 3 3

m or stasis.lationship tom a tradingate itself ont trades) on

e is tradingbove/below

ickness cantility, with acating lowerhat the two

, represent.Sen, so its

ds that theline, on the

price for theof the two,

made a totalt or averagehis value isurrent priceand thus isits positive

her hand, iss continuesof 1.2672. Ifthe Senkou


14/33

FIGUREThe Kumo expands and con(i.e. where the price of a givshort period of time), the fastwith the price curve while therepresents the average of thThicker Kumos are thus crcreated when volatility decrea

Kumo depth or thickness is a

From a trading perspective,will provide. This informationtheir risk management andincreasing their position sizKumo, as the chances of prithan if the Kumo were very this approaching a very well-deto either take profit at the Kaccount for the risk associate

In general, the thicker a

support/resistance it will provi

Kumo Sentiment

In addition to providing a vieKumo itself also has its own "consider that the Kumo is maSpan A and the Senkou SpSpan B, the sentiment is bulli

III - The Kumo and its Calculations racts based on market volatility. With gre

n currency pair changes direction dramatr Senkou Span A will travel along in relatislower Senkou Span B will lag significantlyhighest high and lowest low over the pastated when volatility increases and thinnses.

function of price volatility

he thicker the Kumo, the greater support/can be used by the Ichimoku practitionertrading strategy. For example, they mif their Long entry is just above a parti

ce breaking back below the Kumo is signin. In addition, if they are already in a positieloped Kumo on another time frame, theymo boundary or at least reduce their powith the thicker Kumo.

nd well-developed a Kumo is, the

de.

w of sentiment vis--vis its relationship wiinternal" sentiment or bias. This makes sende up of essentially two moving averages,n B. When the Senkou Span A is aboveh since the faster moving average is tradi

P a g e 14 o f 3 3

ter volatilityically over ae uniformitygiven that it52 periods.r ones are

resistance itto fine tune

ay considercularly thickificantly lesson and pricemay chooseition size to

greater the

th price, these when wethe Senkouthe Senkoug above the


15/33

slower. Conversely, when thsentiment is bearish.

This concept of Kumo sentim

FI

When the Senkou Span A an

from this longer-term perspeleading Kumo's sentiment fortrend changes. The "Senkouthis Kumo twist as both anMore on this strategy is cover

Flat Top/Bottom Kumo

The flat top or bottom that ispiece of the Kumos "equilibrflat kijun sen can exert on pattracting price that is in clos

Span B represents the midperiods - price equilibrium. Siflat Senkou Span B is suchequally strong attractor of pric

In a bullish trend, this flat Sebearish trend it will manifestthis knowledge of the physicsabout both their exits out o

e Senkou Span B is above the Senkou

nt can be seen in Figure IV below:

GURE IV - Kumo Sentiment

B switch places this indicates an overall t

ctive. Ichimoku practitioners thus keep anclues about both current trend as well as aSpan cross" is an actual trading strategyntry as well as a continuation or confirm

ed in our Ichimoku Trading Strategies secti

ften observed in the Kumo is key to underium equation". Just like the "rubber bandrice, a flat Senkou Span B can act in the

proximity. The reason for this is simple: a

oint of a trendless price situation overce price always seeks to return to equilibria strong expression of this equilibrium, ite.

nkou Span B will result in a flat bottom Kuas a flat top Kumo. The Ichimoku practitioof the flat Senkou Span B in order to be mthe Kumo. For instance, when exiting a

P a g e 15 o f 3 3

pan A, the

end change

eye on they upcomingthat utilizes

ation signal.n.

tanding oneffect" that asame way,flat Senkou

he prior 52um, and theecomes an

mo and in aner can useore cautious

flat bottom


16/33

(bullish) Kumo from the bottbelow the Senkou Span B,around which to build theirbottom's "gravitational pull".experienced by the trader.

See the highlighted areas inand bottom kumos:

FIGURE V - Flat Top and Flat

Trend Trading

Definition"Trend following is an investthat play out in various marmarket price calculation, mogeneral direction of the mareactive, diversified, long-tera trend following strategy dothey simply jump on the trend

- Definition of trend following

Ichimoku Kinko Hyo an

It must be understood by anthat it is, first and foremost,trader wielding Ichimoku doetrend trading. This is a key a

m, rather than merely placing an entry oavvy Ichimoku practitioners will look for antry order to ensure they don't get caughis method minimizes the number of fals

the chart for Figure V below for an examp

Bottom Kumos

ent strategy that takes advantage of long ets. Traders who use this approach can

ing averages and channel breakouts to dket and to generate trade signals. This, and systematic by nature. Traders whonot aim to forecast or predict markets orand ride it."

rom Wikipedia

Trend Trading

who wishes to use the power of Ichimoktrend trading system. It is further assu

s so with a solid understanding of the basumption, since knowledge of how to trad

P a g e 16 o f 3 3

rder 10 pipsnother pointt in the flate breakouts

le of flat top

term movesuse currenttermine the

approach issubscribe toprice levels;

Kinko Hyoed that theic tenets ofthe trend is


17/33

absolutely critical to long-terteach one the underlying philmental note at this point retrading.

Trend traders:

NEVER attempt to pr

NEVER attempt to pi

ALWAYS respect the

Let the market tell th

Realize that they will

and end of a trend as

and end are authenti

Look at price action

by volatility

Understand that the

temporary periods of

Understand that tren

large losses

Understand that tren

Profitable trend trading is 99inevitable inner dialogue thatposition! The trend must beterm, they stand an excellentrend trader. However, if theand keep their focus on the lride as a Forex trader.

As a charting system that isprovide the savvy practitionemore secure entry and exitNevertheless, it must be com

full potential.

Ichimoku trading strate

READ THIS FIRST!

Ichimoku is a finely-tuned, intconcert to produce the end ris absolutely key to underst

success with Ichimoku. Ichimoku on itsosophy of trend following, so we must magarding the key factors involved in succ

dict where the market wil l go

k "tops" and "bottoms" of price action

trend and align their trades accordingly

m when the trend is finished, not their "

necessarily sacrifice some pips at th

they wait for confirmation that the tren

from a long-term perspective and don't

will go through some potentially sig

drawdown as the trend matures

d trading can lead to large gains but a

s can take place on multiple time frame

mental. If one can conquer their mind ascreams "Whoa! Looks like price is goingnding - SELL NOW!!" and keep their eyeschance at being a successful, happy ancannot turn off this inner dialogue or at lng-term, then they are in for a very short,

urpose-built for trend trading, Ichimoku Kir with a much deeper view of the trend aignals than any other trend trading syste

bined with the proper mindset in order to b

ies

grated charting system where the five linsult. We emphasize the word "system" hernding how to use the various trading st

P a g e 17 o f 3 3

own will notke a specialessful trend

intuition"

beginning

beginning

get shaken

ificant but

lso equally

s

nd quell theagainst youron the longstress-free

ast ignore itvery bumpy

ko Hyo cand therefore,m available.e used to its

s all work ine because itrategies we


18/33

outline in this section. Everyagainst the prevailing Ichimowhile a scenario that matcheweigh that signal against theoffers a high-probability trad

system and the discrete stratlarger system. Thus, lookingisolated approach that doesnis telling you will meet with mi

Don't misinterpret the messacan bring consistent results iIchimoku picture. We ask thastrategies.

If you are interested in discuthe authors and other Ichim

Forum.

Tenkan Sen/Kijun Sen

The tenkan Sen/Kijun Senwithin the Ichimoku Kinko Hytenkan sen crosses over theSen, then it is a bullish signaSen, then that is a bearish siTenkan Sen/Kijun Sen crosspicture before making any trchances of success.

In general, the Tenkan Sen/classifications: strong, neutral

STRONG TENKAN SEN/KIJ

A strong Tenkan Sen/Kijun Shappens above the Kumo.

A strong Tenkan Sen/Kijun Shappens below the Kumo.

NEUTRAL TENKAN SEN/KIJ

A neutral Tenkan Sen/Kijunhappens within the Kumo.

A neutral Tenkan Sen/Kijunhappens within the Kumo.

strategy covered below is to be used anku "picture" rather than in isolation. Thiss a given strategy may have transpired, yrest of the chart in order to determine whee. Another way of looking at it is that Ic

gies for trading it are merely "sub-systemt trading any of these strategies from an a

't take into account the rest of what the Icxed long-term success, at best.

e; the strategies outlined below are veryf used wisely - which is within the scopet you always keep this in mind when emp

ssing these trading strategies in more detoku traders, please visit the Kumo Trad

ross

ross is one of the most traditional tradinsystem. The signal for this strategy is giv

kijun sen. If the Tenkan Sen crosses abol. Likewise, if the Tenkan Sen crosses belnal. Like all strategies within the Ichimokuneeds to be viewed in terms of the biggding decisions, as this will give the strat

ijun Sen strategy can be classified into thrand weak.

N SEN CROSS SIGNAL

en cross Buy Signal takes place when a

en cross Sell Signal takes place when a b

UN SEN CROSS SIGNAL

Sen Buy signal takes place when a

en cross Sell signal takes place when a b

P a g e 18 o f 3 3

d measuredmeans that,ou still mustther or not ithimoku is a

" within thatutomated orimoku chart

owerful andf the larger

loying these

ail with bother Ichimoku

g strategiesen when theve the Kijunw the Kijunsystem, theer Ichimokugy the best

ee (3) major

ullish cross

earish cross

ullish cross

earish cross


19/33

WEAK TENKAN SEN/KIJUN

A weak Tenkan Sen/Kijun Shappens below the Kumo.

A weak Tenkan Sen/Kijun Shappens above the Kumo.

See the chart in Figure I belosen/kijun sen cross:

FIGURE I - Te

But wai t! Have you check

With these three major classequation - the Chikou span.span, this component acts awith every single trading sigTenkan Sen/Kijun Sen crossTenkan Sen/Kijun Sen cross

Chikou Span's location in relcross is a "Buy" signal and thtime, this will add greater stresignal and the Chikou Spanprovide additional confirmatioto the price curve is the oppothat will weaken the signal.

SEN CROSS SIGNAL

n cross Buy signal takes place when a

n cross Sell signal takes place when a b

for an example of several classifications

kan Sen/Kijun Sen Cross Classifications

ed the Chikou span?

ifications in mind, we will add somethingAs we explained in the section detailinga "final arbiter" of sentiment and should

nal in the Ichimoku Kinko Hyo chartingis no different. Each of the three classificentioned above can be further classified

ation to the price curve at the time of thee Chikou Span is above the price curve atngth to that buy signal. Likewise, if the crois below the price curve at that point in tin to that signal. If the Chikou Span's locatisite of the Tenkan Sen/Kijun Sen cross se

P a g e 19 o f 3 3

ullish cross

earish cross

f the tenkan

lse into thethe Chikoue consultedystem. Thetions of theased on the

cross. If thethat point ins is a "Sell"

me, this willn in relationtiment, then


20/33

Entry

The entry for the Tenkan Seplaced in the direction of thNevertheless, in accordance

bear in mind any significant lgetting a close above those l

Exit

The exit from a Tenkancircumstances of the chart.Sen cross in the oppositmanagement and time frameupon other Ichimoku signals,

Stop-Loss Placement

The tenkan sen/kijun sen strstructure for stop-loss placeshould consider their executithen look for the appropriate

Take Profi t Targets

Take profit targeting for the Tin one of two different waperspective where take profitrader perspective, where thethe current trend to be invalithe opposite direction of their

Case Study

In the 4H chart in Figure II bat point A. Since this cross"neutral" buy signal, thus wconfirm this sentiment beforabove the Kumo at point Bour stop-loss, we look for theIn this case, the bottom edg(1.5872).

Once we place our entry andwhile keeping an eye out for11 days and then, on the 1Tenkan Sen/Kijun Sen crosssince Ichimoku is telling us th1.6014 at point E for a total g

n/Kijun Sen cross is very straightforward - cross once the cross has been solidified

ith good Ichimoku trading practices, the t

vels of support/resistance near the crossvels before executing their order.

Sen/Kijun Sen cross will vary with thhe most traditional exit signal is a Tenk

direction of your trade. However, pconcerns may dictate an earlier exit, or aust as in any other trade.

ategy does not dictate use of any particulent, like some other strategies do. Instean time frame and their money managemerevailing structure for setting their stop-los

nkan Sen/Kijun Sen cross strategy can bes. It can be approached from a day/

t targets are set using key levels, or frotrader does not set specific targets but rat

dated by a Tenkan Sen/Kijun Sen cross ttrade.

low we can see a bullish Tenkan Sen/Kijutook place within the Kumo itself, it is cwait for price to exit and close above tplacing our long entry. Price does achi

1.5918) and we place our long entry at thplace where our trade sentiment would bee of the Kumo provides us with just that

stop-loss orders, we merely wait for the traotential exit signals. Price rises nicely for tth day of the trade, price drops enough

below the Kijun Sen at point D. This is ouat the sentiment has changed, so we closeain of over 95 pips.

P a g e 2 0 o f 33

an order isby a close.ader should

nd consider

e particularn Sen/Kijunrsonal riskexit based

ar Ichimoku, the trader

nt rules and.

approachedwing trader

a positionher waits foranspiring in

n Sen crossonsidered ahe Kumo toeve a closeat point. Forinvalidated.at point C

de to unfolde next 10 toto have ther exit signal,our order at


21/33

FIGURE II - T

For maximum risk managemloss up with price once priceoption for doing this would bebelow the bottom edge. For estop-loss with the Kijun Sen,

Kijun Sen CrossThe Kijun Sen cross is one ofthe Ichimoku Kinko Hyo syexcellent results, though it witime frames due to the increasignal is given when price crfrom the bottom up, then it isis a bearish signal. NeverthelHyo system, the Kijun SenIchimoku "picture" before coIn general, the Kijun Sen cclassifications: strong, neutral

STRONG KIJUN SEN CROS

A strong Kijun Sen cross Buythe Kumo.

A strong kijun sen cross Sellthe Kumo.

enkan Sen/Kijun Sen Cross Case Study

nt on this trade, we also could have movwas a conservative distance away from outo move the stop-loss up with the Kumo, ken tighter risk management, we could haveeping it 5 to 10 pips below that line as it

the most powerful and reliable trading stratem. It can be used on nearly all timell be somewhat less reliable on the lower,ed volatility on those time frames. The Kiju

osses over the kijun sen. If it crosses thea bullish signal. If it crosses from the topss, like all trading strategies within the Ichross signal needs to be evaluated againmitting to any trade.

ross strategy can be classified into threand weak.

SIGNAL

signal takes place when a bullish cross ha

ignal takes place when a bearish cross ha

P a g e 2 1 o f 3 3

ed our stop- r entry. One

eping it justmoved our

oved up.

egies withinframes withday tradingn Sen crossprice curveown, then itimoku Kinkot the larger

e (3) major

pens above

pens below


22/33

NEUTRAL KIJUN SEN CRO

A neutral Kijun Sen cross Bwithin the Kumo.

A neutral Kijun Sen cross Swithin the Kumo.

WEAK KIJUN SEN CROSS

A weak Kijun Sen cross Buythe Kumo.

A weak Kijun Sen cross Sellthe Kumo.

See the chart in Figure III belSen cross:

FIGURE

Chikou Span conf irmatiAs with the tenkan sen/kijungood use of the Chikou spanclassifications of the Kijun Son the Chikou Span's locatiothe cross is a "Buy" signal anin time, this will add greater"Sell" signal and the Chikou

S SIGNAL

uy signal takes place when a bullish cr

ell signal takes place when a bearish cr

IGNAL

signal takes place when a bullish cross ha

ignal takes place when a bearish cross ha

w for an example of several classification

III - Kijun Sen Cross Classifications

on en cross strategy, the savvy Ichimoku trad

o confirm any Kijun Sen cross signal. Eachn cross outlined above can be further clasin relation to the price curve at the time ofthe Chikou Span is above the price curve

strength to that buy signal. Likewise, if thpan is below the price curve at that point

P a g e 22 o f 33

ss happens

ss happens

pens below

pens above

of the Kijun

er will makeof the three

sified basedthe cross. Ifat that pointe cross is ain time, this


23/33

will provide additional confirrelation to the price curve isthat will weaken the signal.

Entry

The entry for the Kijun Sendirection of the cross once thaccordance with good Ichimosignificant levels of support/rabove those levels before ex

Exit

A trader exits a Kijun Sen cprice crossing the Kijun Senthat the trader move their sto

order to maximize their profit.

Stop-Loss Placement

The Kijun Sen cross strategystop-loss is determined andSen's strong representationdeterminant of sentiment. Texecuting a bullish Kijun Semomentum is present to furth

When entering a trade upon

value of the Kijun Sen and plthe Kijun Sen that their entry i"buffer" above/below the Kijuprice's historical behavior visindividual trader, but 5 to 10looking to enter Short, the tcurrent Kijun Sen and when lust below the current Kijun S

Once the trade is underway, tmovement of the Kijun Sen,the Kijun Sen itself acts as

keep a tight hold on risk man


Take profit targeting for thetwo different ways. It can betake profit targets are set uwhere the trader does not set

ation to that signal. If the Chikou Span'the opposite of the Kijun Sen cross's sen

ross is very straightforward - an order iscross has been solidified by a close. Nev

ku trading practices, the trader should bearesistance near the cross and consider gecuting their order.

oss trade upon their stop-loss getting trigin the opposite direction of their trade. Th-loss in lockstep with the movement of the

is unique among Ichimoku strategies in thaanaged by the Kijun Sen itself. This is dueof price equilibrium, which makes it

us, if price retraces back below the Kijucross, then that is a good indication tha

er the nascent bullish sentiment.

a Kijun Sen cross, the trader will review

ace their stop-loss 5 to 10 pips on the opps placed on. The exact number of pips for tn Sen will depend upon the dynamics of-vis the Kijun Sen as well as the risk tolepips should be appropriate for most situaader will look to place their stop-loss juoking to enter Long, the trader will place thn.

he trader should move their stop-loss up/dlways maintaining the 5 to 10 pip "buffer"."trailing stop-loss" of sorts and enables t

gement while maximizing profits.

ijun Sen cross strategy can be approachpproached from a day/swing trader persping key levels, or from a position traderspecific targets but rather waits for the cur

P a g e 23 o f 33

location intiment, then

laced in theertheless, inin mind anyting a close

gered whenus, it is key

Kijun Sen in

the trader'sto the Kijunn excellentn Sen aftert insufficient

the current

osite side ofhe stop-losshe pair andrance of thetions. Whent above theeir stop-loss

wn with theIn this way,he trader to

d in one ofctive whereperspective,rent trend to


24/33

be invalidated by price crossitheir trade.

Case Study

In the 1D chart in Figure IV bat point A. While the initial crcross, it is still beneath a verywait until we get a close abovwe also have the additionalSen cross and a nice upwarmore bullish price action evtrading strategy guidelines apoint C.

Once we place our entry andwhile continually moving up

the next 40 days staying weldrop and, on the 44th day,point D closing out our trade

FIGUR

Kumo Breakout

Kumo Breakout trading or "Kmultiple time frames, thoughDaily, Weekly, Monthly) of th

ng back over the Kijun Sen in the opposit

low for USD/CHF we can see a bullish Kijuoss is above the Kumo and therefore a relakey Chikou Span level (not visible on this

e that key level before entering at point B.enefit of confirmation from a bullish Tenkd angle to the Kijun Sen, bolstering our pn more. For our stop-loss, we follow th

nd place it 10 pips below the prevailing

stop-loss orders, we merely wait for the traur stop-loss with the Kijun Sen. Price ris

l above the Kijun Sen. After this point, priprice crosses the Kijun Sen and hits ourand netting us a profit of 641 pips.

IV - Kijun Sen Cross Case Study

mo Trading" is a trading strategy that canit is most widely used on the higher time fe position trader. Kumo breakout trading i

P a g e 24 o f 33

direction of

n Sen crosstively stronghart), so wet this point,

n Sen/Kijunrospects for

Kijun Senijun Sen at

de to unfolds nicely for

e begins tostop-loss at

be used onrames (e.g.:s the purest


25/33

form of trend trading offeredkumo and price's relationshifocuses only on whether pricnutshell, the signal to go lonthe prevailing Kumo and, like

the prevailing Kumo.

See the chart in Figure V bel

FIGUR

Entry

The entry for the Kumo breabove/below the Kumo, theNevertheless, care does nefake" which can be especialltop/bottom kumo. To ensurethe Kumo, it is always advisyour entry to just above/beloa key level provided by thestructure that could act as amomentum of the trade.

Kumo breakout traders alsocommitting to a trade. If the lalso Bear, then that is a verexcessive volatility, but rathKumo contradicts the directi

y the Ichimoku charting system, as it looksp to it for its signals. It is "big picture"e is trading above or below the prevailingin Kumo breakout trading is when price c

wise, the signal to go short is when price

w for an example of a kumo breakout buy

E V - Kumo Breakout Buy Signal

akout trading strategy is simple - whenrader places a trade in the direction of td to be taken to ensure the breakout is

prevalent when the breakout takes placthe flat top/bottom is not going to attractble to look for another Ichimoku structurethe Kumo breakout. This anchor can be a

hikou Span, a Kumo shadow or any otherditional support/resistance to solidify the

ake good use of the leading kumo's sentiading Kumo is a Bear Kumo and the Kumy good sign that the breakout is not anr a true indication of market sentiment. Ifn of the breakout, then the trader may w

P a g e 25 o f 33

solely to thetrading thatKumo. In a

loses aboveloses below

ignal:

price closese breakout.not a "head

from a flatrice back toto "anchor"

nything fromappropriateirection and

ment beforebreakout isberration ofthe leading

ant to either


26/33

wait until the Kumo doesconservative position sizing t

Exit

The exit from a Kumo breatrader merely waits for their sof the Kumo on which the trmoving their stop-loss up witassures they maximize their

Stop-Loss Placement

Being a "big picture" trend tstrategy is placed at the poiloss for a Kumo breakout tradthe trade is transpiring on, 10

manage to reach the point ofa major trend change has tak


While traditional take profitstrategy, it is more in-line witthe stop-loss up/down with thtake full advantage of the trunequivocally that the trend i

Case Study

In the Weekly chart in Figurbreakout taking place at poibearish as well, which acts texiting from a flat-bottom Kua false breakout, we look forbefore entering. The close wB and we enter short.

For our stop-loss, we followaway from the opposite sidecase, we place it 20 pips aw

point C (.7994).

Once we place our entry andwhile continually moving ourare using the Weekly chart avery long-term trade. In thisbreak out of the Kumo to theaway at point D netting us ov

agree with the direction of the trade oaccount for the increased risk.

out trade is the easiest part of the wholop-loss to get triggered as price exits the oade is transpiring. Since the trader has b

the Kumo during the entire lifespan of throfit and minimize their risk.

rading strategy, the stop-loss for the Kut that the trend has been invalidated. The must be placed on the opposite side of th- 20 pips away from the Kumo boundary.

the stop-loss, the trader can be relativelyn place.

argets can be used with the Kumo breathe long-term trend trading approach to

e Kumo as it matures. This method allowsnd without closing the trade until price acover.

VI below for AUD/USD we can see a bt A. We also see that that leading Kumo

o confirm our breakout sentiment. Giveno and that we want to reduce any risks ofa close below the last Chikou Span supare looking for is achieved shortly therea

he Kumo breakout guideline of placing itf the Kumo where our breakout is takingy from the top of the Kumo above our ent

stop-loss orders, we merely wait for the tratop-loss down with the prevailing Kumo. Gour execution time frame, we prepare ou

case, nearly two years later, price raisether side, where it triggers our buy order s

er 1100 pips in the process.

P a g e 26 o f 33

r use more

trade. Thepposite sideeen steadilye trade, this

o breakouts, the stop-

e Kumo thatIf price does

ssured that

kout tradingimply movethe trade to

tion dictates

arish Kumois distinctly

that price isentering onort at .7600fter at point

10 - 20 pipslace. In thisry candle at

de to unfold iven that we

selves for aenough to

ome 20 pips


27/33

FIGUR

Senkou Span Cross

The Senkou Span cross isIchimoku Kinko Hyo system.cross tends to be more cotrading strategies rather thanright. However, it is nonethel

used on its own.

Given that the Senkou Spanutilize the Kumo for signal geof the Daily chart and abovsenkou span A line crossesSpan A crosses the Senkoucrosses from the top down, tstrategies within the Ichimoneeds to be evaluated againstrade.

The thing to keep in mind wisignal will take place 26 pershifted 26 periods into the futcurrent price on a live chart,addition, while all Ichimoku spicture in mind, this is partidetermining the overall trend

VI - Kumo Breakout Case Study

ne of the lesser known trading strategieThis is mostly due to the fact that the Smonly used as an additional confirmatiobeing used as a standalone trading stratess a solid trend trading strategy and can

cross strategy, like the kumo breakout tradneration, it is best employed on the longer. The Senkou Span cross signal is givver the senkou span B line of the kumo. Ifpan B from the bottom up, then it is a bullihen it is a bearish signal. Nevertheless, liku Kinko Hyo system, the Senkou Spant the larger Ichimoku "picture" before com

th the Senkou Span cross strategy is thaiods ahead of the price action as the Kuure. This relationship is obvious when one

but less so when looking at historical pritrategies should be exercised with the larularly important with the Senkou Span

on higher time frames first and then taking

P a g e 2 7 o f 33

s within theenkou Span

with othery in its own

definitely be

ing strategy,time framesn when thethe Senkouh signal. If ite all tradingcross signalitting to any

the "cross"mo is time-looks at thee action. Iner Ichimokuross. Thus,

only Senkou


28/33

Span signals that align witimplementation of the Senkou

In general, the Senkou Spaclassifications: strong, neutral

STRONG SENKOU SPAN C

A strong Senkou Span crossof the Kumo that matches the

NEUTRAL SENKOU SPAN

A neutral Senkou Span crosKumo at the time of the Senk

WEAK SENKOU SPAN CRO

A weak Senkou Span crosopposite side of the Kumo thaThe chart in Figure VII belowThe dashed vertical lines repSenkou Span cross. Thus, pbe categorized as a "strong"point of the cross, was tradibearish Senkou Span cross tat point D below the Kumo.buy signal since price (point

FIGURE VII

h that trend on the lower timeframesSpan strategy.

cross strategy can be classified into thrand weak.

OSS SIGNAL

signal takes place when the price curve issentiment of the senkou span cross.

ROSS SIGNAL

signal takes place when the price curveu Span cross.

SS SIGNAL

signal takes place when the price curvt matches the sentiment of the Senkou Spshows some classifications of the Senkouesent the 26-period relationship betweenint A represents a bullish Senkou Span crbuy signal due to the fact that price (poing above the Kumo. Likewise, point C rat generated a strong sell signal due to prihe Senkou Span cross at Point E generat) was trading within the Kumo at that point

I - Senkou Span Cross Classifications

P a g e 28 o f 33

is the best

e (3) major

on the side

is inside the

e is on then cross. Span cross.

rice and theoss that cant B), at the

epresents ace's locationed a neutral.


29/33

Entry

The entry for the Senkou Spmentioned above, entries dhigher time frames before ex

higher time frames, the traddirection as the overall trendtime frame. Once they identidirection of the Senkou Spanwill be well-advised to consilocation relative to the KumIchimoku components at theentry.

It is worth mentioning here ththat took place in April of 20not aligned with the overall

Thus, traders taking this traddirection as their exit signalimportance of evaluating seoverall trend.

Exit

The exit from a Senkou Spacross in the opposite directiodepending upon the trader's r

Stop-Loss Placement

Being a "big picture" trend traloss for the Senkou Span crothat the trade is transpiring on


While traditional take profit tastrategy, it is more in-line wSenkou Span cross to transpout the position. This methowithout closing the trade unt

over.

Case Study

In the Daily chart in FigureSpan cross at point A. Thiscandle closed just below theits sentiment agrees with taddition, we confirm that th

n cross trading strategy is relatively simplrequire even more attention to the over

ecuting any trades. After determining the

r looks for a fresh Senkou Span cross ithat has been solidified by a close on thy a suitable opportunity, they initiate a psentiment. As in all Ichimoku trading strateer the relative strength of the cross (vis-

) as well as the sentiment provided by thtime of the cross in order to ensure the m

at the strong bull (buy) signal outlined in o5, while technically strong from a 1D persowntrend in-place on the Weekly and Mo

signal and using a Senkou Span cross inwould have actually lost pips. This undtiment on multiple time frames and tradi

cross trade is generally signaled by a Sn of the trade, though other exit signals misk tolerance and profit goals.

ding strategy like the kumo breakout stratess strategy is placed on the opposite side, 10 - 20 pips away from the Kumo bounda

rgets can be used with the Senkou Spanith the long-term trend trading approach tire in the opposite direction of the trade b

allows the trade to take full advantageil price action dictates unequivocally that

III below for USD/CAD we can see a beacross corresponds to the candle at pointKumo, the signal is considered a strong oe sentiment of the bearish Senkou Spe direction of this signal is aligned with

P a g e 29 o f 33

, though, asall trend onrend on the

n the samee executionsition in thegies, traders-vis price'se remainingost optimum

ur first chartective, was

nthly charts.

the oppositerscores the

ing with the

enkou Spanay be taken

y, the stop- of the Kumo

ry.

ross tradingo wait for afore closingof the trendthe trend is

rish Senkou. Since the

e given thatn cross. Inthe overall


30/33

downtrend in-place on the Wtrading with the trend. Nevertright of the candle, which cconservative entry point thbreakouts. The last Chikou S

assuring this. Price closes benter short at point C.

For our stop-loss, we followaway from the opposite sidecase, we place it 20 pips awpoint D (1.2542).

Once we place our entry andcontinually moving our stop-lmore than four months later,the opposite direction of our t

where we close out our trade

FIGURE V

Chikou Span Cross

For those that have been ulength of time, utilizing the ChWhy? Because the Chikou Sthat savvy Ichimoku traderstrade. This confirmation comprice curve in the direction of

ekly and Monthly time frames, so we knoheless, we are wary of the flat bottom kumould act as an attractor for price, so wt will ensure we will not get caught ian support at 1.2292 looks like a good anc

low this point a couple of days later at 1.2

he Kumo breakout guideline of placing itof the Kumo where our trade is taking py from the top of the Kumo above our ent

stop-loss orders, we wait for the trade tooss down with the prevailing Kumo. In thirice ranging has created a fresh Senkou Sade at point E, corresponding to the candl

at 1.1908, netting us over 380 pips in the p

III - Senkou Span Cross Case Study

ing the Ichimoku Kinko Hyo charting sysikou Span cross strategy should be like sean cross is essentially the "Chikou Span

utilize to confirm chart sentiment befores in the form of the Chikou Span crossingthe proposed trade. If it crosses through th

P a g e 30 o f 33

that we areojust to the

look for aany false

hor point for

290 and we

10 - 20 pipslace. In thisry candle at

unfold whilecase, a bit

pan cross ine at point F

ocess.

tem for anyond nature.onfirmation"ntering anythrough theprice curve


31/33

from the bottom up, then it isis considered a bearish signal

Thus, we already know theconfirmation strategy. Howe

Chikou Span cross can begood success.

Like many other Ichimoku trprice's relationship to theclassifications: strong, neutral

STRONG CHIKOU SPAN CR

A strong Chikou Span crossand current price is above the

A strong Chikou Span crosplace and current price is bel

NEUTRAL CHIKOU SPAN C

A neutral Chikou Span crossand current price is within the

A neutral Chikou Span crosplace and current price is with

WEAK CHIKOU SPAN CRO

A weak Chikou Span cross Band current price is below the

A weak Chikou Span cross Sand current price is above the

The chart in Figure IX belowGiven the fact that the Chikointo the past, we must alwayrelation to the price curve (ththe kumo. Thus, Point A1 icurve downward and Point A

However, since the candle atof the cross, this particular sistrong bullish cross can becrossed upward through thewas above the prevailing Kugiven that they transpired abo

a bullish signal. If it crosses from the top.

power of the Chikou Span cross via iter, when used within some simple gui

sed as its own standalone trading strate

ding strategies, the Chikou Span cross sumo to categorize its signals into threand weak.

OSS SIGNAL

uy signal takes place when a bullish crossKumo

Sell signal takes place when a bearishw the Kumo.

OSS SIGNAL

uy signal takes place when a bullish crosKumo

Sell signal takes place when a bearishin the Kumo.

S SIGNAL

uy signal takes place when a bullish crossKumo

ell signal takes place when a bearish crossKumo.

provides several examples of the ChikouSpan is a measure of closing price shiftekeep in mind both the location of the Chi"cross" itself) and the current candle and ithe point where the Chikou Span cross

2 is the closing candle that initiated that b

Point A2 was above the prevailing Kumonal would be categorized as a "weak" bea

seen in Points B1 and B2 since therice curve and the closing candle at thato. Points C1 and C2 represent a weak b

ve the prevailing Kumo.

P a g e 3 1 o f 3 3

own, then it

s use as adelines, the

y with very

rategy uses(3) major

takes place

cross takes

takes place

cross takes

takes place

takes place

Span cross.26 periods

kou Span ins relation tod the pricearish cross.

at the pointish cross. Ahikou Spanoint in time

earish cross


32/33

FIGURE I

Entry

The entry for the Chikou Spaa position in the direction of tcross's strength and other chtrader will also look for the CSpan can often interact with t

Exit

The most traditional exit forChikou Span cross in the opmay be taken depending upo

Stop-Loss Placement

The Chikou Span strategy dfor stop-loss placement, likeconsider their execution timlook for the appropriate preva


Take profit targeting for the Ctwo different ways. It can betake profit targets are set uwhere the trader does not setbe invalidated by a Chikou Strade.

- Chikou Span Cross Classifications

n cross is relatively straightforward - the tre Chikou Span cross after taking into consart signals. For the highest probability ofikou Span itself to be free of the Kumo ae kumo much like the price curve.

a Chikou Span cross trade is generally siposite direction of the trade, though other

the trader's risk tolerance and profit goals.

es not dictate use of any particular Ichimsome other strategies do. Instead, the trframe and their money management rul

iling structure for setting their stop-loss.

hikou Span cross strategy can be approacpproached from a day/swing trader persping key levels, or from a position traderspecific targets but rather waits for the curpan cross transpiring in the opposite dire

P a g e 32 o f 33

der initiatesideration theuccess, thethe Chikou

gnaled by aexit signals

ku structureader shoulds and then

ed in one ofctive whereperspective,rent trend totion of their


33/33

Case Study

In the Daily chart in Figure Xcross at point A. However,still below significant resistan

In addition, the Tenkan Senprovide any additional confirentering Long. This is achievmoves back up through thecandle to close and then ententry is increased by thetranspired.

For our stop-loss, we considbelow the Kijun Sen at 1.195Chikou Span executing a frbearish Kijun Sen cross, both

Once we place our entry aDepending upon our tradingKijun Sen to keep a tighter rtraditional method of waitingtrade. In this case, a Chikouunder two months later (Poinfor a gain of over 450 pips.cross on its own would be cthe kumo, it is bolstered by athree-line pattern. Alternativelstop in this trade, instead of

somewhere around the 1.273

FIGURE

below for USD/CHF we can see a bullishhile it is technically a strong cross, the Chice provided by the two Chikou Span point

nd Kijun Sen are in a flat configuration wation. Thus we wait for a more convincingd five (5) days later at Point B1 when therice curve after a brief dip below. We waiter long at 1.2164 at Point B2. Our confidullish Tenkan Sen/Kijun Sen cross tha

er the prevailing structures and decide to6, since a cross below that point will not oesh bearish cross, but also have priceof which would invalidate our long position.

d stop-loss orders, we wait for the tradstyle, we could opt to trail our stop-loss alein on risk management or we could utilior a Chikou Span cross in the opposite dirSpan cross in the opposite direction tak

t C1) at 1.2619 (Point C2) and we closeIt is worth noting that, even though thensidered technically "weak" due to its lobearish Tenkan Sen/Kijun Sen cross to foy, if we had chosen to use the Kijun Sen aaiting for a Chikou Span cross, we would

5 level, which would have netted us over 5

Chikou Span Cross Case Study

hikou Spankou Span iss at 1.2090.

hich doesn'tetup beforehikou Span

for the dailyence in this

has since

place it justnly have theexecuting a

e to unfold.ng with thee the morection of ours place justut our tradehikou Spanation above

m a bearishs our trailinghave exited

0 pips.

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