A Versatile Trend Trading Indicator For Stocks And Forex

Don't get intimidated by the name Ichimoko Kinko Hyo if you are unfamiliar with Japanese. Ichimoko Kinko Hyo is indeed a very versatile trend trading indicator that you must not miss!

Ichimoko Kumo Hyo Indicator is surprisingly not a well known indicator. However, it is considered to be a very good trend trading indicator by PRO traders who have used it in their trading. The primary strength of the Ichimoko Kinko Hyo System is that it uses multiple data points to give the trader a deeper and comprehensive picture of the price action.

Ichimoko Indicator will enable you to immediately distinguish the prevailing trend and the relationship of the actual price with regard to that trend. It will provide you with a multi dimensional view of the support and resistance as compared to just a simple one-dimensional level that is provided by most of the other charting systems.

You can use the Ichimoko Kinko Hyo Indicator for measuring momentum, support and resistance, identify the direction of the trend as well as know when to enter and exit the trend.

Ichimoko Cloud is the core of the Ichimoko Kinko Hyo Indicator and consists of the following five plots;

1. Conversion Line. This is also known as the Tenkan-sen in Japanese.

2. Baseline. This is also known as the Kijun-sen.

3. Senkou Span A which is Leading Span A

4. Leading Span B. This is also known as the Senkou Span B in Japanese.

5. Lagging Span also known as Chikou Span

This is how these five plots are calculated;

Conversion Line= (9-Period High+9-Period Low)/2

Baseline = (26-Period High+26-Period Low)/2

Leading Span A=(Conversion Line+Baseline)/2

Leading Span B=(52-Period High+52-Period Low)/2

Lagging Span =Close Plotted 26 days in the past.

The most important plots are the Leading Span A and the Leading Span B. When prices move above the baseline or the Conversion Line moves above the baseline, it is taken as a bullish signal. Similarly when the prices or the conversion line moves below the baseline, it is a bearish signal. This indicator works best on the daily and weekly charts. You can use this indicator on your MT4 Platform.

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