Ichimoku
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Ichimoku charts are trend following indicators that
identify support and resistance levels and generate trading signals
in a way similar to moving averages. Ichimoku chart lines are
shifted forward in time. This creates wider support and resistance
zones and decreases the risk of trading false breakouts. |
Turning Line = (Highest High + Lowest Low) / 2, for the past n1 days
Standard Line = (Highest High + Lowest Low) / 2, for the past n2 days
Leading Span 1 = (Standard Line + Turning Line) / 2, plotted n3 days ahead of today
Leading Span 2 = (Highest High + Lowest Low) / 2, for the past n4 days, plotted n5 days ahead of today
Like a moving average crossover strategy, Ichimoku is long when
the Turning Line crosses the Standard Line from below. They generate
is short when the Turning Line crosses the Standard Line from
above.
Additionally, area that is formed between Leading Spans 1 and 2 is
known as a cloud, and defines support or resistance. Clouds not only
act as support or resistance, they also help to identify trend
direction. When prices are above the cloud, the trend is up. When
prices are below the cloud, the trend is likely down.
Trading any market carries a high level of risk, and may not be suitable for
all investors. The high degree of leverage can work against you as well as
for you. Before deciding to invest you should carefully consider your
investment objectives, level of experience, and risk appetite. The
possibility exists that you could sustain a loss of some or all of your
initial investment and therefore you should not invest money that you cannot
afford to lose. You should be aware of all the risks associated with
trading, and seek advice from an independent financial advisor if you have
any doubts.
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Fibonacci Trader. Last updated:
May 21, 2011
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