Ichimoku Kinko Hyo is an investment strategy developed by a Japanese journalist Goichi Hosoda, who signed his articles pseudonym Ichimoku Sanjin. Hosoda developed this strategy before World War II and for more than thirty years, he worked on improving Ichimoku, until in 1969 he published a book in which he described the rules. Below, one of the few pictures Hosody available to the general public:
Ichimoku is the investment strategy for the so-called “Trend Following” or followers of the trend, let us say with a high probability that we are in a trend (not correction), let us to determine the exact point of entry into the market and a few techniques getting out of the operation. It certainly is not a strategy that captures the peaks and bottoms on the price chart, it is a strategy that will forgive losing a single pip. But in return, the Ichimoku allows you to earn a stable, giving time to apply management of the capital, relatively stress-free, without poring front of the computer all day.
So this strategy may seem like grail but it is not, there are false signals, the price suddenly turn and start going in the opposite direction, but we will learn how to go out with a loss without ruining our capital. It is a strategy designed for real trading, which takes into account all possibilities, but the most important is that the Ichimoku, which I am pleased to present you in the long run it makes profits.
Ichimoku is very popular among Japanese traders, and although it does a great job on all the currency pairs but we should always have in mind pairs such as GBP / JPY EUR / JPY and USD / JPY using the original settings. How Mrs. Elliott wrote in her book, when something begins to happen in the market I want to see what others see.
Tenkan Sen – Red Line
Kijun Sen – Blue Line
Senkou Span A – upper limit of growth cloud (blue), the lower limit of the downward cloud (green)
Senkou Span B – lower limit of growth cloud (blue), the upper limit of the downward cloud (green)
Chikou Span – green line.
Tenkan Sen
This is an average, we get by adding the highest maximum and lowest minimum achieved by the price during the period and divided by two.
Formula: (HH + LL) / 2 for the last 9 periods.
Kijun Sen
This is an average, we get by the formula (HH + LL) / 2 for the last 26 periods, which is the highest maximum and lowest minimum achieved by the price in the last 26 periods
Chikou Span
It is a linear graph set back for 26 periods and is used to confirm the trend.
Senkou Span A
This is the average we get by adding Tenkan Sen and Kijun Sen divided by 2 and the result is placed about 26 periods forward (Tenkan Sen + Kijun Sen) / 2.This is another Ichimoku specific, mean that we place an average on the chart with 26 candles to the front and watch how the price will behave relative to the average in the future.
Senkou Span
B line Senkou Span B we get by adding the highest maximum and lowest minimum of the last 52 periods (candles) divide the result by 2 and put the 26 periods (candles) to the front.
(HH + LL) / 2
How I play:
First of all I check the chart D1 and I do not play against the trend of the TF (sometimes, of course, there may be exceptions if such price is in the cloud).
Signals from H4. The most important message is the getting out of the cloud, especially in the direction of the trend. Another signal is bounce from the line Kijun Sen. > Price breaks that line, but returns to form a candle that indicates the continuation of the trend.
Position management: I watch if there are no signs of a reversal of the trend: close above / below the line Kijun Sen contrary to the trend, closing the candle in the cloud. I check if the price does not respond to a resistance / support then I shorten positions.
Closing the position: TP at important monthly or weekly support/resistance. Closing the position at support / resistance of D1, closing position when the opposite signal.
When I’ll want to show you my positions, I will usually post with what attitude I open them , how I’ll manage them , where I see the goal, etc..
