Ichimoku Kinko Hyo strategy – Trend breakout
A typical Forex trading statement is “never against the trend”. The Ichimoku Kinko Hyo, an indicator with a nice Japanese name, is another trend following indicator. ichimoku means a view, kinko safe and hyo chart. It sounds weird without any particles. This indicator is used seldom which make it more interesting to check than a stupid moving average of each 08/15-strategy. Except in news trading are Support and Resistance always important, while the impacts of news are typical high enough to break each trend line. The Ichimoku Kinko Hyo try to predict Support and Resistance, which allow very powerful trades. Read to full post to learn how exactly use it.
About the Ichimoku Kinko Hyo:
Open the tools of your choice, for example MetaTrader and your preferred legit autotrader. The Ichimoku Kinko Hyo looks first very complex, because he uses five lines, two form a so-called cloud (jap. kumo). Below are the exact descriptions of the lines, before we use them to make money. The color and periods are the default values in MetaTrader. You can adjust each value, but you don’t need.
- kijun sen, blue: This is the base line, the average of the past 26 candle sticks. In a daily timeframe are this around a month.
- tenkan sen, red: This is the conversion line. It is the average of the high and lows of the past nine candles and in daily timeframe almost two weeks (without weekends)
- senkou span a, SandyBrown (orange): This is one line of the cloud and simple the average between kijun sen and tenkan sen. It is plotted 26 candles into the future.
- senkou span b, Thistle (pink): This is the other side of the cloud and the average of the high and lows of the past 52 units. It is plotted 26 periods ahead too.
- chikou span: This are the closing prices shifted 26 periods into the past. In other words, it is your chart, but drew 26 steps to left. (Assuming right is your today price and up- and down are the price levels)
The Support and Resistor breakout strategy:
We will in this strategy guide only watch the cloud. Always keep in mind, “sidewards breakouts” are not signals. That is if the spans fall or rise will the price move sidewards. Trend lines are straight while the cloud typical isn’t. Both spans of the Ichimoku Kinko Hyo are support- and resistance. When the price is above both, then are the two different supports, when the price is below, then both are level one and two resistance. If the cloud is smaller than the price movements, take care and may ignore the chart. But very impressive are breakouts while the price is between both.
Open your chart, add a default Ichimoku Kinko Hyo and look what happened after the price left the spans vertical: This breakout often are strong enough to place a lot winning trades in a row. For newbies is it not recommend to fire trades like machine guns, but around 80 % are at least one trade with deep ITM possible. This is already all: Open the signal generator of your choice, and the asset to trade. If Nuvo show a bearish signal and the price is below the cloud and in the near of place the trade, if the price is between (and the cloud is wider than the candles) and in the near of the upper span place the trade. If the price break the bottom of the cloud, place definitively a trade. Trade Bullish signals vise versa.
Where to use the Ichimoku Kinko Hyo strategy?
The Ichimoku Kinko Hyo can much more. Don’t forget kijun sen, tenkan sen and chikou sen. The tenkan sen works as trend indicator. When it rises, the asset is in an uptrend, when it falls, it is a downtrend. The kijun sen allow to predict the market movements, if it crosses the tenkan sen, other trend signals are generated. The chikou span will generate signals too. That is why the Ichimoku Kinko Hyo is great. You get a many indicators at once which could fill a lot blog posts and strategy descriptions. Don’t forget to join our newsletter to get the next news and strategies soon as possible. For further questions please send a small email to [email protected] or use direct the contact form.