CHAPTER 16
Ichimoku Charting & Analysis
LEARNING OBJECTIVES
After studying this chapter, the practitioner and student should be able to:
- Understand the proper application of Ichimoku analysis to price action
- Calculate and derive all four mid-range priced moving averages
- Identify Ichimoku based resistive and supportive confluences
- Identify the price filter characteristics inherent within Ichimoku charting
- Understand the real meaning of equilibrium and balance in Ichimoku charting
- Identify bullish and bearish Ichimoku-based signals and triggers
- Describe the various ways to initiate a trade based on the Ichimoku overlays
Ichimoku Kinko Hyo analysis is very rapidly gaining popularity in western-based technical analysis. It offers traders and analysts a unique and powerful way of reading current market behavior as well as acting as a leading indicator of potential future support and resistance. It is a surprisingly easy overlay indicator to use despite its complex appearance on the charts. Once mastered, it will afford practitioners a fast and straightforward way of determining market regime changes and future market reaction levels.
16.1 CONSTRUCTING THE FIVE ICHIMOKU OVERLAYS
Goichi Hosoda, also known as Ichimoku Sanjin, introduced his work based on Japanese candlestick charting in the late 1960s. It is basically a candlestick chart superimposed with five overlays comprising of moving-average-type overlay indicators. Ichimoku Kinko Hyo loosely translates into single glance balance ...
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