Japan has always been an example of an innovative and economically developed state, and has earned this reputation for quite some time. The end of World War I was beneficial to her in terms of economics. It developed, conquering global markets, and in general it can be said that the country was on the rise. During this period, a Japanese analyst, Goichi Hosoda, lived in Japan, under the pseudonym Sanjin Ishimoku, who actually invented the Ichimoku indicator (equilibrium graph).
The Ichimoku indicator is a Japanese candlestick analysis, where a candle is a type of interval chart. Its essence lies in identifying trends, lines of support and resistance, generating signals when buying or selling. The Ichimoku indicator, in essence, is a part of technical analysis that allows you to track a trend – that is, the direction of forex prices. It can be applied in almost all different markets: currency, stock, commodity, term, etc.
It allows you to quickly track its key parameters, such as price direction, mood, moment and trend strength. More generally, the Ishimoku indicator is a forex strategy, more precisely a certain part of the technical analysis of the market, which allows you to observe changes in any parameters on forex.
It also gives a more specific picture of the market, since the method uses a larger number of points, allowing to determine price activity. The Ichimoku indicator is an opportunity to study the market in detail, since it has more technical indicators, and it is possible to make a more thorough economic forecast. So, how can I use the Ichimoku indicator?
Understand how to read the graph. It consists of lines, each of which has its own meaning. Initially, we will understand the classification of lines. There are 4 types of them: Kijun, Tenkan, Senkou, Chikou.
Kijun – visualizes the sum of the maximum and minimum on the graph divided by two, and is viewed over an average period of time. The graph is calculated for the last 22 candles. Tenkan is essentially the same as the previous value, but they have slightly different time scales. The graph is calculated for 7-8 candles. Senkou – is a kind of average between the previous two indicators, and shifted forward by the average time interval. Chikou – this line shows the average between the maximum and the minimum for a long period of time.
The selected area is called the “Ichimoku Cloud”. To start trading on the currency pair chosen by the trader, he is looking for the intersection of the lines, this is called Moving Averages.
Reconciling the trend direction using the Chikou line — you need to make sure that the trends in the Forex market coincide with the areas of intersection of the Kijun and Tenkan lines — this parameter will increase the likelihood of a successful trade, since Chikou works like the Momentum indicator.