6) Horizontal shift; in Ichimoku Charts:
Moving the MA forward is an attempt to use it as a guide for future support or resistance.
The Ichimoku Kinko Hyo – hereon called simply Ichimoku – indicator/system manipulates moving average to give us visual cues of support and resistance as well as generate trading signals. However, instead of using the moving average of the closing price, it uses the MA of something different. Refer to the calculation below copied over from the FXTimes glossary.
Calculation
The Ichimoku chart consists of five lines constructed using only the midpoints of previous highs and lows. The five lines are calculated as follows:
1) Tenkan-Sen = Conversion Line = (Highest High + Lowest Low) / 2, for the past 9 periods
2) Kijun-Sen = Base Line = (Highest High + Lowest Low) / 2, for the past 26 periods
3) Chikou Span = Lagging Span = Today’s closing price plotted 26 periods behind
4) Senkou Span A = Leading Span A = (Tenkan-Sen + Kijun-Sen) / 2, plotted 26 periods ahead
5) Senkou Span B = Leading Span B = (Highest High + Lowest Low) / 2, for the past 52 periods, plotted 26 periods ahead
Kumo = Cloud = area between Senkou Span A and B
Here is an example of what the Ichimoku Kinko Hyo
Parts 1-7:
1) As an indicator of general trend relative to price
2) As an indicator of general trend based on the 2 different moving averages
3) Other multiple moving average systems
In construction of other indicators:
4) MACD
5) MA envelop – Bollinger Band
6) Horizontal shift; in Ichimoku Charts
7) “Smoothing Out” other Indicators ie. Stochastic Oscillator
Fan Yang CMT is the Chief Technical Strategist FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.
