Ichimoku Kinko Hyo is a technical indicator invented and published by the Japanese for more than 30 years. It’s a tool to measure momentum and project future support and resistance.
First of all, the Japanese word “Ichimoku” means “one glance”, “Kinko” means “balance / equilibrium and “Hyo” means “chart”, in short Ichimoku Kinko means to see the equilibrium at a glance. Basically, the indicator is best used to define market trend, support and resistance and finally generate buy/sell signals.
Ichimoku Kinko Hyo consists of 5 lines and a “Kumo” or known as “cloud” as most people call it. Whilst Ichimoku Kinko Hyo utilizes five separate lines, they shall not to be used independently but rather to use them together to form a comprehensive view of the price action in order to formulate trading strategies. After studying these indicators, one should be able to understand market sentiment, momentum and relative strength of a trend “at a glance”.
By studying each of the five components that make up Ichimoku Kinko Hyo, one shall be able to have a clear perspective of the relative equilibrium of the market as these lines can reflect market force, the balance between buyers and sellers.
II: THE FIVE LINES OF ICHIMOKU
- TENKAN SEN
- KIJUN SEN
- SENKOU SPAN A & B, THE KUMO / “CLOUD”
- CHIKOU SPAN