The Tenkan-Kijun Cross Explained

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How to Use Ichimoku Kinko Hyo. Ultimate Guide

Principal of Ichimoku Kinko Hyo

Ichimoku Kinko Hyo is a technical analysis method devised in 1926 by Goichi Hosoda, better known under the pen-name Sanjin Ichimoku. In Japanese Ichimoku Kinko Hyo roughly means “instant representation” or “one glance cloud chart”. The indicator was designed in addition to candlestick charts on the commodity market, and the author used it successfully for rice trading. Later it was elaborated and introduced to the public in 1968, since then being one of the traditional instruments of Japanese traders.

Our modern world of trading takes interest in the indicator as well, because it provides information about the direction and the potential of trends. The indicator shows the support and resistance lines and gives signals of market entry and exit. Ichimoku can be used on Forex, too, especially on daily and weekly charts. It works best in combination with candlestick charts. Setting the parameters right allows using the Ichimoku on smaller time frames, such as H4 and H1.

The Ichimoku Setup

Tenkan-sen shows the average price counted as the sum of the maximum and minimum price divided by 2, during a certain period (9 candlesticks by default). Tekan-sen is the quickest line of the Ichimoku chart, its incline indicating the direction of the trend. If the line goes up, the trend is ascending; if it goes down, the trend is declining.

Kijun-sen is the average value between the maximum and minimum during a certain period (26 candlesticks by default).

Senkou B shows the average between the maximum and minimum during a certain period, but the line is shifted forward for the value of Kijun-sen (default period is 52 candlesticks and the shift is 26 candlesticks).

Different sources give different explanations to the numbers above. One says that the number 52 used in the Senkou B parameter stands for 52 weeks, i.e. 1 year, while 26 from Kijun-sen stands for half a year. At the same time traders who has been using the instrument for a long time claim that Goichi Hosoda put a totally different meaning into the parameters. 52 means 2 standard work months (Saturday used to be a workday in Japan), 26 is the length of 1 month, and 9 is 1.5 workweeks [непонятно, откуда взялась девятка – в описаниях выше об этом параметре не было никаких упоминаний]. Today the length of a workweek is 5 days, so it might be reasonable to refresh the parameters.

If we reduce the basic values too much, the indicator will react upon the changes on the market too quickly, which will yield lots of opening signals but their quality will be too poor, i.e. there will be many false signals. If we increase the values significantly, the indicator will form the signals too slowly, which means we may miss the opportunity to enter the market at a good price. However, it is worth mentioning that the initial parameters were meant for the Japanese index Nikkei for time frames longer than the daily one. In order to use the indicator efficiently in trading currency pairs, it should be customized in accordance with the pairs’ particularities.

In the indicator itself only the basic parameters change, though on the chart there are much more lines. Let us discuss their meaning.

The Tenkan-sen line (red) is the quickest of all lines of Ichimoku. Its incline shows the direction of the trend. If it goes up, the trend is ascending; if it goes down, the trend is descending.

The Kijun-sen line (blue) reflects the current trend. If the price is above the line, it is highly probable that it will keep growing, and vice versa.

The Chikou Span line (green) shows the price of the instrument shifted back for the value of the Kijun-sen. It is used when forming entry signals.

The Senkou Span A line (orange) is the average of the Tenkan-sen and Kijun-sen lines shifted forward for the value of the Kijun-sen.

The Senkou Span B is a white dotted line representing the average of the maximum and minimum during the last 52 candlesticks, shifted forward for the value of the Kijun-sen. The hatched area between the Senkou Span A and Senkou Span B forms the Ichimoku cloud.

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Ichimoku Formula

The indicator consisting of five lines, each of them is calculated by its own formula. Some of them are Moving Average lines in essence, so they are calculated accordingly.

For calculating the Kijun-sen line the arithmetic average of the minimum and maximum candlesticks during a certain period (26 candlesticks by default):

Kijun-sen = (Max(High, M) + Min(Low, M)) / 2

  • Max(High, M) is the highest maximum during the period
  • Min(Low, M) is the lowest minimum during the period
  • M is the period

The Tenkan-sen line is calculated the same way but for a shorter period (9 candlesticks by default):

Tenkan-sen = (Max(High, N) + Min(Low, N)) / 2

  • Max(High, N) is the highest maximum during the period
  • Min(Low, N) is the lowest minimum during the period
  • N is the period

Chinkou Span is calculated as the current Close moved backwards for the value of a certain period (26 by default).

Senkou Span A is the arithmetic average of Tenkan-sen and Kijun-sen moved forward for a desired number of periods (26 by default):

Senkou Span A = (Tenkan-sen + Kijun-sen) / 2

Senkou Span B is the arithmetic average of each candlestick [?] of the chosen interval (52 by default), moved forward for 26 periods:

Senkou Span B = (Max(Z) + Min(Z)) / 2

  • Max(Z) – maximum during the period.
  • Min(Z) – minimum during the period.
  • Z is the length of the intervals.

The values of the periods by default were suggested by the author of the indicator on the basis of his own trading experience. When working with Ichimoku the default settings can be customized according to the actual market situation and the trader’s preferences.

Trading By The Ichimoku Indicator

The position of the lines shows the direction and the strength of the trend. If the Tenkan-sen and Kijun-sen lines are above the price (the short Tenkan-sen closer to the latter), it represents a stable descending trend.

And vice versa, if the lines go below the price (Tenkan-sen being closer to it), the market must be experiencing a strong ascending trend. This signal is considered rather strong.

Ichimoku Crosses

A cross is a crossing of Tenkan-sen and Kijun-sen. In the Death Cross a short Tenkan-sen crosses a long Kijun-sen downward. The crossing occurs above the price. This figure may signal a reversal of the price to the downside.

Conversely, the Golden Cross is comprised of a short Tenkan-sen crossing a long Kijun-sen upward under the price. This situation may mean an upcoming reversal of the trend to the upside. The signals might come a bit late, so it is hardly advisable to use them as the only source of information.

Senkou Span A And B

Senkou Span A and B are leading lines forming the Ichimoku Cloud, which can be hatched any colour of the client’s choice. The first pattern is when Senkou A goes above Senkou B (the Cloud is brown); the second pattern features Senkou B above Senkou A (violet hatching). These signals give excellent results when used together with Fibo levels (especially in large time frames).

The signals appear when:

  1. The price is moving inside the Cloud.
    Getting inside the Cloud, the price signals a safe trading channel, A and B lines normally acting as the support and resistance lines.
  2. The lines cross one another.
    When they do so, it may signal a reversal of the trend.
  3. The price breaks through Line B.
    It is one of the most important signals of the indicator, because Senkou Span B represents the average price of the preceding periods. In this case the breakthrough forecasts a strong long-term trend. Such signals are considered to be among the most reliable in trading but require caution as well as other do: the prognosis will be more accurate if the signals confirm a previously formed trend.

The Chinkou Span Line

Even experienced traders seldom use this line as its signals may be hard to analyze. It is a lagging line shifted 26 periods back from the last closing price on the chart. The number of periods can be changed if you need to receive signals more or less often. What signals do we get from this line? If Chinkou Span has broken through the price upward, it may predict a reversal of the trend to the upside. And vice versa, a top to bottom breakthrough may signal a reversal to the downside. The signal is quite weak, so it would be unwise to make decisions just on its base.

Ichimoku Signals

All signals of the indicator can be divided into weak, neutral and reliable.

Weak Signals

One example would be crossing of the Cloud border by the price. If the price enters the Cloud abruptly, a serious “suppression” follows (as a rule). Watch the charts for several periods before acting boldly.

Neutral Signals

For example, Tenkan-sen crosses Kijun-sen when the price is already inside the Cloud. While the price is inside, the signal will not be strong enough. The probability of a reversal will grow only if the price nears the borders of the Cloud.

Reliable Signals

Among these, there is one of the most serious signals which is the price escaping the Cloud. As a rule, a strong impulse follows, and if the trader forecasts it well, they can enter a long-term trend. Many traders open new positions at the breakthrough of the Cloud.

Ichimoku Pros And Cons

Any trading system has its own particularities, its own pros and cons. Trading with the Ichimoku Kinko Hyo indicator is a good way to learn trading in the direction of the dominant trend and to hold your positions for as long as possible. The author himself pointed out how to define trends efficiently: if the price is inside the Cloud, the trend is sideways; if the price is above or below it, there is a strong trend.

Unfortunately, in most cases beginners are not ready to follow the market and do not like it. They prefer “reversing” the market, which is hardly efficient in the long term and may even lead to serious losses. In this case the indicator advises the trader against selling on the growing market; instead, it would be better to enter the market in the direction of the trend and hold the positions until the exit signal is received.

In addition, Ichimoku Kinko Hyo can generate signals in the direction of the current trend by itself. For example, the Moving averages can determine the trend well, but they will hardly give additional signals in the direction of the trend. That is why another oscillator is often used to confirm the signals. In this case Ichimoku alone will be enough for trading in the direction of the trend and getting different signals.

Another peculiarity of this technical analysis instrument is that it gives the trader strict rules of entry and exit. This virtually excludes the appearance of spontaneously opened positions which usually have no perspectives and lead to losses. Here one has nothing to do but to watch the market and wait patiently for a signal to sell or to buy, and after the transaction – to look for an exit point.

The Cloud clearly shows the support line when the price goes above the cloud. When the price is below it, the borders of the Cloud represent the resistance lines. This rids traders of searching some important information on the chart.

Serious “disadvantages” of the indicator appear when one uses it during periods of low volatility, when the trend is not yet formed and the price trades in a narrow range. The price would keep breaking through the Cloud upward and downward, demonstrating no stable trend, and the signal lines would keep generating signals to buy or to sell alternately. In such circumstances positions with close Stops will close unreasonably often. However, situation like this are uncommon; what is important here is to abstain from overrating the lot; it would be best to wait until reliable signals return.

Summary

Ichimoku Kinko Hyo is a unique instrument that let traders carry out a full technical analysis of the market without additional indicators. It helps define the trend on the market and find the closest support and resistance lines. Working with the indicator, traders have to follow serious rules that exclude “intuitive” positions. The main advantage is receiving signals in the direction of the current trend. However, no matter how good a trading system might be, the basics of trading, which is money management, is never to forget.

Kijun-sen line indicator

  • Post # 2
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  • Feb 11, 2020 3:43am Feb 11, 2020 3:43am

Please , can you test this one ??

  • Post # 3
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  • Edited Apr 25, 2020 9:48am Apr 24, 2020 4:58pm | Edited Apr 25, 2020 9:48am
  1. D raws Kijun-sen.
  2. D efault s: p eriod = 26. C hange as required.
  3. More free indicators � Here � see lower right panel

Advisable to test the below EA s on demo before live – see below function conditions
Kijun-sen EA: Close O n T ouch Kijun- S en EA – v1.mql4

  1. Defaults: period = 26, crossed pips = 0, slippage = 3. Change as required.
  2. W ill close all open position on a chart when pri ce touches Kijun-sen.
  3. All open positions on corresponding charts (i.e same symbol or instrument) will also be closed.
  4. O p en positions on n on-corresponding charts will not be closed.
  5. No other options at present.
  6. A dd code for further options as required. Please rename EA and upload for other users.
  7. More free indicators – Here-Mql4 Codebase/file45

MA EA: Close O n T ouch MA EA – v1.mql4

  1. Defaults: period = 34, ma type = EMA, crossed pips = 0, slippage = 3. Change as required.
  2. W ill close all open position on a chart when pri ce touches MA .
  3. As above – 3, 4, 5 , 6 & 7
  • Post # 4
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  • Edited Apr 30, 2020 3:28am Apr 29, 2020 3:24pm | Edited Apr 30, 2020 3:28am
  1. Kijun-sen + Top & Bot Envelopes
  2. Defaults: period = 26, envelope = 400, show top envelope = true, show bot envelope = true. Change as required.
  3. An alternative method of hiding an element of an indicator is to change it’s color to – None

GBPAUD, period = 26, envelope = 4,000, time frame – daily

  • Post # 5
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  • Edited Jun 12, 2020 5:04am Jun 11, 2020 1:10pm | Edited Jun 12, 2020 5:04am
  1. The Kijun Sen traditional default period of 26 is optimized for the daily timeframe. Lower timeframes require appropriate parameter adjustments.
  2. For lower timeframes the Kijun Sen period can to be increased to 34, 52, 78, 100 etc., and Envelope deviation lowered.
  3. HR1 & HR2 periods fair better than lower in long run. See GBPUSD, GBPAUD, EURAUD – view HR2 chart history for assessment – test Kijun Sen 50, 100 etc., or use multiple Kijun Sen.

Inputs and Parameters:

  1. Kijun_Sen_Period – 26;
  2. Envelope_Deviation – 4000;
  3. Envelope_Upper_Label_Color – LimeGreen;
  4. Kijun_Sen_Label_Color – DodgerBlue;
  5. Envelope_Lower_Label_Color – Red;
  6. Text_Size – 12;
  7. Make_Text_Bold – true;
  8. Move_Text_Right – 25;
  9. Show_Top_Envelope_Band – true;
  10. Show_Kijun_Sen – true;
  11. Show_Bottom_Envelope_Band – true;
  12. Show_Labels – true;
  • Post # 6
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  • Jul 16, 2020 7:44am Jul 16, 2020 7:44am

hey bro. this is great work.

is it possible if you have the time for your next revision to have the slope of the kijun sen coloured?
similar concept to the xpma indicator.

if kijun is increasing – option to choose a colour for it
if kijun is decreasing – option to choose a colour for it

thanks in advance.

  • Post # 7
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  • Jul 18, 2020 11:14am Jul 18, 2020 11:14am
  • Post # 8
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  • Edited at 3:45pm Jul 24, 2020 8:38am | Edited at 3:45pm

Tenkan and Kijun Color Fill

This indicator is awaiting publication on MQL4 Code Base under author file45. No further description is possible.

A full description is available – HERE

Image: Color Fill – 1 of 1, 2, 3 or 4. // Tick Chart on foreground – Chart Properties (F8).

  • Post # 9
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  • Edited at 12:28pm Jul 24, 2020 8:44am | Edited at 12:28pm

MA1 + MA2 Color Fill

This indicator is awaiting publication on MQL4 Code Base under author file45. No further description is possible.

Image: Color Fill – 1 of 1, 2, 3 or 4. // Tick Chart on foreground – Chart Properties (F8).

  • Post # 10
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  • Edited at 2:20pm Jul 26, 2020 12:54pm | Edited at 2:20pm

Color Candles cross Kijun Sen – This indicator is awaiting publication on MQL4 Code Base under author file45. No further description is possible.
Color Candles cross MA – This indicator is awaiting publication on MQL4 Code Base under author file45. No further description is possible.

To use these Indicators the required instructions must be followed. If the Instructions are not followed the Indicators will not work.

The instruction for Color Candles cross Kijun Sen MT4 is the same as for MT5 – See here for instructions

The instruction for Color Candles cross MA MT4 is the same as for MT5 – See here for instructions

4 Predefined Kijun Sen Indicators of periods 21, 34, 50 and 100 are included in a zip file below.

Gold – M15 – Kijun Sen period = 50 (26-Jul-2020)
First solid vertical line – London Open 08:00 (03:00 ET). Second solid vertical line – London 14:00 (09:00 ET). Session Open V- Line

  • Post # 11
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  • Edited at 12:32pm Aug 7, 2020 1:25am | Edited at 12:32pm

1. Indicator : Change Symbol – Light
2. Indicator : Change Symbol – Full

These Indicators enable a User to change the symbol on a chart by clicking the associated Symbol Button.

Note: If chart symbols are other than the standard EURUSD such as EURUSDSB or EURUSD_uk the User needs to see “Notes on Suffix”.

First, see if you are in agreement with a number of considerations.

Consideration 1.
The use of these Indicators is dependent on files mt4gui.dll and mt4.mgh. Both are FREEWARE but require a FREE license key for every computer running the dll file. The license key is obtained via email from FX1.net – they do not spam ! When the Indicator is first loaded a pop up will request a name (does not have to be actual – use a handle) and email. Once submitted a License Key will be immediately send which is then entered in said pop up. There is no limitations to the number of free licenses. FX1.net Location

These files are include in MT4GUI.zip below.

Consideration 2
This indicator does not appear on the chart when the MT4 terminal is started. Switching timeframes is the Harry Potter stuff that works the magic. A bit of a bother but this is due to a MT4 Terminal indicator limitation not being able to register the WindowHandle when first loading. See – FAQ → Is MT4GUI Compatible with Indicators?

Consideration 3:
When the the MT4 Terminal is closed a pop up will appear: MetaTrader has stopped working → Close the program (see image 6). Click – Close the program.

Consideration 4
I have run these indicators on windows 7 – 64 and 32, Dual Monitor systems, but not XP. I have not experienced crashes.

Consideration 5.
If you are still here, here is some necessary info.

  1. The Radio Buttons panel is anchored to the top left corner but can be moved as required. See Left_Right and Up_Down parameters.
  2. The Radio Panel color can be changed.
  3. Any Symbol can be changed from the Inputs tab. The Full version also has SPARE Radio Buttons for User to input additional symbols. See image 5.
  4. Notes on Suffix: The User should experience no problems with standard symbols notation such as EURUSD. Some Broker’s use variants like EURUSDSB. See “Suffix” in Inputs tab (image 3). If, as example, “SB” (without quotation marks) is entered all the symbols will have SB added. i.e EURUSDSB, GBPUSDSB etc. See image 4. Note that the “Suffix” must be case sensitive. I tested this successfully on a Broker that uses additional capital letters. This did not work on a MT4 Terminal that uses EURUSD_uk. I added “_uk” in the Suffix but could not get it to work. Futures symbol such as LCrudeSept13 will also not work. At the moment I do not have time to look into this. Coders welcome to contribute to solutions. Please post for other users.
  5. GOLD may have to be changed to XAUUSD or other variant.
  6. Change Symbol – Light has an option to hide some Symbols – see image 2.

Important : Make sure Allow DDL imports is checked: Tools → Options → Expert Advisors → (tick) Allow DLL imports – see image 7 below.

Location of Files
Change Symbol Light or Full : place in experts/indicator folder.
mt4gui.dll : place in experts/library folder.
mt4gui.mgh : place in experts/include folder.

  • Post # 12
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  • Edited Aug 14, 2020 5:05am Aug 13, 2020 6:31pm | Edited Aug 14, 2020 5:05am

Notice: Re above Change Symbol Indicators – mt4gui.dll file

1. FX1.net have updated the mt4gui.dll file so the mt4gui.dll in the above post is out of date and will no longer work.

The automatic update did not work for me and the manual update did not replace the mt4gui.dll file but made a copy mt4gui.dll(1). It is perhaps quicker to delete all old mt4gui.dll files from all MT4 Terminals and copy a fresh updated file. I have attached the latest update but this will at some time be updated and need replacing. Future updates will have to be downloaded from FX1.net.

2. Note: If a Template is made containing Change Symbol Light and another containing Change Symbol Full then it is not possible to change immediately between the two without the MT4 Terminal closing. To change from one to the other without MT4 Terminal closing first change to a Template containing neither Indicators and then to the Template containing the Indicator of choice.

  • Post # 13
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  • Aug 26, 2020 11:28am Aug 26, 2020 11:28am
  • Post # 14
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  • Edited at 7:22pm Sep 6, 2020 12:29pm | Edited at 7:22pm
  • Post # 15
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  • Edited at 9:45am Sep 20, 2020 12:52am | Edited at 9:45am

Indicator: Alert Rouge Orders

The Stop and Limit Orders features of MT4 are easily opened accidentely when a Trader is working on the chart. On shorter timeframes the opened order line can be off the visible area of the chart and the Trader unaware that an order has been opened.

The present indicator has two states.

A label displays the indicator state.

Text is bold but can be turned off – see Parameters (set Font_Bold: false).

1. No Orders will allow Buy, Sell, Stop and Take Profit but will constantly alert on every tick (price change) if any of the following pending orders are open:

The Alert will constantly repeat until either

1. The order is deleted.
2. The indicator Alert is switched to Allow Orders (Orders_Alert: false).

Orders can be deleted manually from the Terminal (Ctrl+T) or by draggng the delete_pending script (experts/scripts) onto the chart.

Comment: It is not possible to code deletion of pending orders as an indicator in MT4. Manual, script or EA deletion are the available options.

2. Allow Orders will not alert to any orders.

Orders_Alert: true;
No_Orders_text: NO Orders;
Allow_Orders_text: Allow Orders;
No_Orders_Color: Red;
Allow_Orders_Color: LimeGreen;
Font_Size: 11;
Font_Bold: true;
Font_Corner: 1;
Left_Right: 25;
Up_Down: 125;

  • Post # 16
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  • Edited at 12:42pm Sep 23, 2020 3:05am | Edited at 12:42pm

A place to organize my stuff. This unused thread as good as any. Surewin888 these may be considered exercises in right speech.

The below indicators are improvements of indicators I have published on MQL4 Code Base as author File45 or elsewhere as Phylo or something else.

The image illustrates trades taken to check the below cases against the MT4 Terminal values.:

  1. A Buy profit
  2. A buy loss
  3. A Sell profit
  4. A Sell loss
  1. Position anywhere on chart.
  2. SER = Broker Server Time. Broker Time cannot be changed.
  3. The remaining 5 Time Zones can be changed.
  4. The SER label and remaining 5 labels can be changed.
  5. Time Zones not required can be hidden.
  6. In the above demo image LND (London) is offset – 1, NYC (New York City) offset -6 etc,.
  7. If Time Zones are hidden the Up_Down parameter may require a negative value to align closer to chart bottom margin.
  8. As default, two Time Zones are hidden. If these Time Zones are unhidden then the Up_Down parameter must be changed from – 20 to a positive number to lift the indicator off the chart lower margin.
  9. For bold fonts set Fonts_Bold: true.

2. ACC+BAL+MARG v2

  1. Auto detects account currency.
  2. Can be aligned with any corner. Locked at horizontal.
  3. Individual Account Headings not required can be hidden.
  4. HIDE ALL function. Set Show_All: False.
  5. Margin percentage (0.xxx%) is to three decimal places and against Free Margin. (Margin/Free Margin)*100.
  6. For bold fonts set Fonts_Bold: true.

3. Open Positions v2

  1. Locked to the top right corner of the secondary window.
  2. The indicator should open as a secondary window below the main window.
  3. The indicator can also be dragged onto any secondary window such as Stocastics or MACD etc,
  4. If the indicator does not open as a secondary window (unlikely) and is preferred to occupy its own secondary window then install Blank.mq4 and drag the indicator onto Blank.mq4.
  5. The indicator is only visible when one or more positions are open.
  6. p = points. MT4 calculates in points not pips. Compare chart p numbers in included demo image against numbers* under Profit Heading in (Account) Terminal. **
  7. Use Column_Spacer to increase or decrease distance between columns. Too large an increment may result in the indicator moving off the display area. For finer control use decimal increments.
  8. For bold fonts set Fonts_Bold: true.

* If you find your MT4 Terminal numbers differ from the installed Indicator proceed as follows: Open Terminal(Ctrl+T). Right-click heading Profit. Shift cursor to → Profit menu. Select → as Points.
** Put focus on the chart and bring up the cross hairs (Ctrl+F) or click mouse scroll wheel. Hold the left mouse button down and drag a line at about 45 degree angle. The first number on left is Time displacement, the second number is Price displacement in Points, the third number is Price.

Calculate the value of a move: The point value can be quickly calculated. As per above Image, AUDUSD (117.12/(10.43 x 18)) = (117.12/187.74) = 0.62384. In this case �0.62, but for greater accuracy retain 5 decimal placing. So a 180 point move on 10.43 lots should be 1,171.20. Proof. 10.43 x 180 x 0.62384 = 1,171.20.

  1. Indicator update can lag the terminal in fast market, on slow PCs or slow connections. A tick-generator keeps all MT4 platforms up-dating current. Free – Here. Says for EA but keeps indicators up-dating current as well.

5. Install Location: experts/indicators

The Tenkan-Kijun Cross Explained

Ichimoku Indicators for Metatrader 4

Example: Ichimoku shown on a ProRealTime Chart

The Tenkan-Kijun Cross Explained

The optimum combination of indicators is a basis of any profitable strategy for which searches you can spend years. At the same time, the Ichimoku indicator is included in a base pack of all trade platforms. It representing ready to use trade system which can easily be adjusted to any market, if necessary.

The Ichimoku technique uses the unique indicator of the same name created in the country of the first market theory – in Japan in the first half of the 20th century by analyst Hosoda Goichi (a pseudonym − Sanjin Ichimoku). Sometimes it’s possible to meet the complete name − Ichimoku Kinko Hyo. The indicator was created and tested on data on dynamics of the Japanese stock index Nikkei.

However, this means of the technical analysis was provided to the public only in the 60th years of last century as his creator very carefully checked and enhanced the analytical tool. It includes the most balanced mechanism of the analysis of price movement that is why this indicator is called still the indicator of market balance.

All options of Ichimoku strategy are effective in any conditions and practically on all trade assets. They combine benefits of the trend guide with moving averages, and its lines as it isn’t surprising, practically match wave 50% kickbacks according to Elliott’s basic theory.

Mathematics and indicator’s settings

The Ichimoku indicator is created by Hosoda for the quickly graphical analysis of a market situation. Visually the Ichimoku Kinko Hyo indicator is five lines which are constructed over a price chart, and also the shaded space between two of them. Three time frames are used for calculations:

  • A short time frame – 9 periods;
  • An average time frame – 26 periods;
  • A long time frame – 52 periods.

Let you be not confused by affected Japanese names – calculations of lines are rather simple.

Tenkan-sen, or Tenkan − the line of a «turn», basic color – red. The line of a short trend, regular average (a half of the sum of High + Low) for the first interval of averaging, by default – 9. The trend guide, the more a tilt angle, the stronger direction. As the regular moving average, performs support/resistance function.

Kijun–sen, or Kijun − the line of «standard», basic color − blue. The average line is on the second interval, by default – 26. A more reliable indicator of a trend. If the price is higher than the line – further growth is supposed, below – a fall. A release from this line – rather strong signal to enter.

SenkouSpanA, or Senkou A – the upper (first) «future» line, basic color – different shades of red. Its value – in the middle of Tenkan/Kijun range, but displaced forward on the size of the 2nd time frame.

SenkouSpanB, or Senkou B – the lower (second) «advancing» line, basic color – various shades of green. The average line for the biggest interval shifted forward on the size of the 2nd time frame. By default – 52.

The space between SenkouA and SenkouB is shaded in different colors, depending on a relative positioning of lines, forming graphical «Cloud» (Kumo). When the price inside of Cloud – the market is flat, and borders are as strong lines of resistance. If the price is higher than a cloud − the bull market, below – bear.

ChinkouSpan – the «late» line showing the closing price of a candle, which is remote from the current one on the size of the second time frame.

Substantially all lines of the Indicator are an average price value for a certain period of time, that is − an analog of moving averages, so a trend is directed in the way where lines are moving to, and horizontal lines will mean a flat. Ichimoku levels are dynamic, the emergence of new price peaks and hollows involves instant reorganization of all graphical picture.

There is a set of options of use of Ichimoku lines within the creation of trade system. The specified parameters are classical, experiments with time frames and the periods of the indicator allow to find optimum configurations which will correspond to the individual style of trade for each trader.

Ichimoku strategy application in real trade

Parameters for the system have basic setup on the stock market which market cycle is equal 1 year. The idea of the indicator’s author (it still call Hosoda’s logic) was that the first parameter – the line Tenkan shows an average price value for 9 days (one and a half business weeks). The second parameter Kijun − 26, this number of the working days in a month as in Japan there were 6 working days a week during that period. The third parameter – the size 52, this number of days in two working months, determines Senkou Span B value.

Considering the above, how rational to use classical parameters now? If to consider that nowaday trade week constitutes 5 days, and, respectively, there are less trading days in a month. Then it is logical for trade on schedules of Daily (and less) try to correct indicator parameters under modern trade week in 5 days. We receive Tenkan for D − 8 (or 7), or one and a half business weeks, 22 – number of the working days in a month (on average), and 42 – the period in two working months.

Following Hosoda’s logic, it is possible to calculate parameters and for other time frames. It turns out that basic settings are adjusted for work on week candles, but also intra-day, in case of small correction towards the equivalent reduction of parameters, the system gives excellent signals and gets off only at the moments of the speculative market, for instance, after the news.

Important: the last argument in case of work on I c himok u strategy is always the ChinkouSpan line: if this line is higher than the price in case of any BUY signal, then this is an additional confirmation of a trading signal. Any signal in SELL will be more reliable if the ChinkouSpan line is lower than the priceat the time of an enter.

The basic purpose of Ichimoku indicator lines is rendering support/resistance to price movement. A number of lines are «stronger» as reflecting a mid-term trend on the chart – it is Kijun and Chinkou B. Lines of a short-term trend Tenkan and Chinkou A are less steady and are more easily stitched by the price. Any Ichimoku strategy includes several tactics with an individual set of trading signals. The interval – from H1 above, D1 is the best.

Tactics 1. Tenkan-sen/Kijun-sen crossing

Bull signal: Tenkan passes Kijun from below up, forming a «gold cross» figure.

Bear signal: Tenkan crosses Kijun line from top to down, forming a «dead cross».

Signals arise in points of intersection of the specified lines, but they need to be analyzed from the point of view of an overall picture of constructions. For assessment of force of a signal the following recommendations are used:

A Strong signal Tenkan/Kijun: for purchase – crossing shall be above Cloud border, for sale − the point of intersection is under the lower bound.

The neutral signal Tenkan/Kijun for purchase and for sale: crossing is in the Cloud.

A weak signal Tenkan/Kijun: for purchase – crossing is under the lower bound of Kumo, for sale – over the upper bound.

Entrance: the order is opened in the direction of a point of crossing after closing of the previous candle. Stop-loss: behind opposite Kumo bounder or according to rules of management of the capital. Exit: at the return crossing of lines or on a take-profit.

Tactics 2. Crossing of Kijun-sen by the price

One of the most reliable signals of Ichimoku trade strategy. The technique works well on all the time frames, but on intra – day is less reliable.

The bull signal Kijun: breakthrough by the price from below up, closing − behind the line.

The bear signal Kijun: breakthrough by the price from top to down with fixing behind the line.

Strong signals: bull − crossing is above Kumo’s bounder, bear – behind the lower bound of the Cloud. Neutral signals for purchase/sale: crossing between Cloud bounders.

Weak signals: bull crossing – below the lower bound, bear – above the upper bound. Check through Chinkou Span – is recommended.

Entrance: the order is opened after a crossing point on a trend, but only after fixing of the previous candle. We track an arrangement of strong levels of support/resistance.

Stop-loss: 5-10 points from the Kijun line on the opposite side (over or under the line). Further, you may move a stop through creation Kijun line, keeping a gap in 10 points.

Exit: on the return crossing at the price of the Kijun line or by rules of a money management.

Tactics 3. SenkouA/SenkouB crossing

According to Ichimoku strategy − it is a signal of a probable turn of a trend or kickback towards the SenkouA line. If SenkouA is crossed by SenkouB from top to down and it is confirmed by a change of color of the Cloud − purchase, in the opposite option – sale. Reliability of this tactics decreases because the SenkouA and Senk lines are constructed expecting «future movement», and the current price is removed for 26 periods from the crossing of lines.

We can discuss the uniqueness of Ichimoku indicator infinitely − this is the universal assistant capable of carrying out the variety of tasks. The main functions are: identification of market trends, determination of key lines of support and resistance, the creation of signals for the opening of positions. Ichimoku indicator is best for day and week schedules.

Practical example: KumoBreakout indicator strategy

The simplified system on the Ichimoku indicator combining benefits of the well-known Japanese technique with the standard oscillator and the smoothing effect of Heiken Ashi candles. Incorporates all necessary tools: trend, pulse and the forecast of future movement, and at the same time doesn’t overload a price chart with excessive information and graphical creations. The technique is profitable on any tool, including − on an unstable trend.

The system doesn’t use price lines with difficult names and works only with Kumo graphical creations of (Cloud) among all Ichimoku tools. A technique essence – use of unique properties of KumoBreakout effect (or breakthrough of Cloud bounds), and Ichimoku missing properties are compensated by additional tools.

Strategy with «cut off» Ichimoku complete with the oscillator for the first time was applied by the famous Swedish trader and the analyst Larsson to trade in binary options − profitability of its signals reached 80%. Subsequently, the accuracy of the fulfillment of a trend inherent in strategy and a capability to forecasting began to be used successfully on Forex.

Adjusting of indicators and principles of KumoBreakout strategy

The template containing three unique indicators along with standard AwesomeOscillator which is installed by a standard method in the basic MetaTrader4 (5) catalog is used.

The Kumo cloud builds the ZB-CloudLines indicator – it is recommended to keep the offered standard parameters and color scale.

The ZB-CloudCandels indicator is responsible for the correct display of price candles according to the current trend and logic of the system.

The standard AwesomeOscillator indicator along with the ZB-CloudMatrix indicator of the direction of a trend is placed in the lower window.

It should be noted the KumoBreakout indicator system has a harmonious red-green color scale by default – nothing extra. The main Cloud which configuration and an arrangement determines availability and the direction of the main trend is constructed on a price chart. HeikenAshi candles smooth the schedule and highlight with color the main tendency.

The key concept of this indicator strategy – «Kumo’s breakthrough», that is a break of the price for the upper or lower bound of the Cloud. Breakthrough of the upper bound means a tendency to growth (purchase), of the lower bound – to fall (sale). The dot indicator which confirms a signal on an entrance by the corresponding color works in an additional window: green – a bull trend, red – bear and gray – the periods of a flat. Change of color warns about a change of a trend.

Important: in case of creation the «steps» of the Cloud rather precisely show turning price levels which in general match a basic Fibonacci’s grid.

Application of KumoBreakout in trade practice

It is possible to apply strategy on any tool, but really steady results are yielded by middle volatile currency pairs: EUR/USD, GBP/USD, AUD/USD, USD/CAD, USD/CHF. Futures yield results only on the periods from D1 above. Cross-pairs for this technique isn’t recommended because of big dependence on fundamental factors.

Recommended time frame: for the search of a point of entry − M15, for holding of the transaction – from H1 above.

Trade time: European and American sessions. We don’t trade before and after the news.–It can be not enough volatility for short-term transactions in a night session, the system tracks a general trend reliably.

So, the KumoBreakout indicator strategy gives a signal for position opening on purchase (Buy) if:

  • The price punches the upper Kumo bound from below up down, the candle is closed above the bound and changes color for green.
  • The dot ZB-CloudMatrix indicator in the lower window of the schedule shall be green.
  • The oscillator gives a standard signal on a bull trend – crossing the zero line or change of the histogram direction to movement up.

Entrance – at the opening of the following candle. While the price is above the Kumo upper bound– the bull trend remains, and the farther from bound – the stronger.

Conditions for position opening for sale (Sell):

  • The price punches the Kumo lower bound from top to down, the candle is closed below the bound and changes color for red.
  • The dot ZB-CloudMatrix indicator shall be red.
  • The oscillator gives a standard signal on a bear trend – crossing the zero line or change of histogram movement of the oscillator to movement down.

Entrance – at the beginning of the following candle. According to the logic of KumoBreakout strategy: until the price is under the Kumo lower bound – bears prevail, and the more a distance to the line – the trend is stronger. We put StopLoss/TakeProfit proceeding from the principles of admissible risk or at the strong price levels.

Flat sites of the market are visible in the direction of the Cloud: during the uncertainty periods, it is located horizontally. If candles keep the last color at the same time, then the trend will proceed with a high probability.

Important: the trend weakens in process of approach of the price to Cloud bounds. «Width» and a configuration of the Kumo area depends on the current volatility of the trade tool.

Important: according to this system we don’t open a position while the price is in the Kumo area (a candle and/or the dot ZB-CloudMatrix indicator has gray color).

The emergence of «false» breaks is possible when the dot indicator shows several gray points (on a price chart – several gray candles) then color changes on previous and the general direction of a trend remains.

As well as the Ichimoku standard indicator, ZB-CloudLines gives a certain forecast – builds «future» Cloud proceeding from the standard assessment of a market situation. It approximately determines a possible configuration of movement and price levels of a possible turn. In case of change of a situation, «future» Cloud is reconstructed, moving on new levels.

It is possible even to approximately predict possible time of a turn on the availability of «steps» on already «fulfilled» Cloud and approximate price levels of a turn or consolidation. The point of intersection of bounds of «future» Cloud quite precisely shows moment where the trend can change with a high probability.

Important: taking into account admissible risk level it is possible to use entrances after speculative «quickly» price breakthroughs of bounds of the Cloud for short-term transactions.

The space of the Cloud can be rather big, therefore, trade inside of it and on a release from its bounds is possible too, but it is the weakest tactics in a set.

If the overall picture is favorable, then we work only for the breakthrough: a purchase signal − closing of a candle over the upper bound, a sale signal – closing under the lower bound.

If the purchase is opened inside the Cloud, then stop − behind its lower bound, if sale – behind the upper bound. Take-profit − opposite bound of the Cloud (from 20% to 120% of Cloud space).

It is necessary to consider «Kumo’s mood», let’s imagine the cloud is painted in «bear» color, then this is an additional confirmation of a signal down. If the color of the Cloud contradicts your intentions – better to wait.

And as the conclusion …

The long-term statistics of trading shows that trade strategy based on the Ichimoku indicator practically don’t yield negative results. Traditionally all techniques give profit in the quiet, not speculative market and medium-term transactions. Standard Ichimoku strategy doesn’t have additional indicators because its mechanism was developed for work with the stock exchange indexes, but to fans of short-term trade is strongly recommended to add indicators of amounts (for example, awesome). Experience shows that use of the additional oscillator gives a set of reliable signals practically on any period. It means – it is possible not only scalping effectively but also to hold open positions for several hours, as much as possible fulfilling possibilities of the current trend.

The external complexity of Ichimoku graphical creations usually frightens off beginners, but that persistent who will spend time for its development, it gives stable profit on any asset. Studying of this strategy requires a lot of time, but the result is worth it: in case of careful setup efficiency of the generated signals reaches 80%. Besides, understanding of the logic of the Ichimoku indicator – it is stylishly, modern and professional for any trader.

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