Ichimoku in PFOREX Assist
Eighty Ninth session – PFOREX Assist Tutorial
Welcome back to Forex professional training.
In this session we will review;
- The Ichimoku specifications and components
- The available Ichimoku strategies
- The Ichimoku strategies’ examples in PFOREX Assist
Ichimoku Indicator
This trading indicator was created and developed by a Japanese Journalist in the late 1930s. Ichimoku in Japanese language means “One Look”. It took around 30 years to enhance this indicator for applying in trades on financial markets. Ichimoku may seem complicated, however, after learning the major lines and their functions, traders can easily apply this indicator in their trades.
This indicator uses and specifies the previous, current and future price trend at the same time. The highest performance of this indicator can be achieved when traders apply it on Trend markets in H4 or higher time-frames.
Ichimoku Components
There are 5 major lines with different characteristics, structure and computing variables as follows;
Tenkan-Sen: Also known as Turning line, this line is the median value of the highest high price and the lowest low price of the 9 recent periods (Candlesticks). This line sometimes acts as a support/resistance line, while it always shows the market trend.
Kijun-Sen: This line is the median value of the highest high price and the lowest low price of the 26 recent periods (Candlesticks). This line also acts as a support/resistance line sometimes, but it is mostly used as future indicator of market trend.
Traders can use both Tenkan-Sen and Kijun-Sen for short term trades
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Senkou-Span A: This line is computed by averaging the sum of current Tenkan-Sen and Kijun-Sen values. Then the value must be projected 26 periods forward. So the current amount of Senkou-Span A is equal to the average of Tenkan-Sen and Kijun-Sen, 26 periods ago. This line can be used as a suitable and effective support/resistance line.
Senkou-Span B: This line is the median value between the highest high price and the lowest low price of 52 periods (Candlesticks). Then this value must be projected 26 periods forward, just like Senkou-Span A. This line is a very powerful support/resistance line especially when it is a flat line.
The Kumo (Cloud of Ichimoku) is developed by Senkou-Span A & B. If the Senkou-Span A is higher thatn the Senkou-Span B, then Kumo is in Bullish state. The thicker the Kumo becomes, the more powerful support/resistance effect on the market price. Although the Kumo specifies the future support/resistance area, still the reversal spots can be detected if the state of the Kumo changes.
Chikou-Span: This line the current market price that is plotted to the 26 periods back. This line shows current price market in respect with the previous market trend to identify the current market tendency
Ichimoku Strategies
Tenkan Kijun
This strategy is developed after Tenkan-Sen line crosses Kijun-Sen toward a direction. There are other conditions that are applied to enhance the generated signal such as Kumo state.
The specifications of this strategy are as follows;
- Market type: Trend & Range market
- Symbols: Entire symbols
- Time-frames: All timeframes
- Entry Price:
- Buy Order: Over the Bullish Kumo, on the spot that Tenkan crosses the Kijun toward top
- Sell Order: Below the Bearish Kumo, on the spot that Tenkan crosses the Kijun toward
- Stop Loss:
- Buy Order: Below the last candlestick on the reversal spot
- Sell Order: Over the last candlestick on the reversal spot
- Take Profit:
- Buy Order: Double or equal to length of the candlestick, over the entry price
- Sell Oder: Double or equal to length of the candlestick, below the entry price
- Confirmations: Hidden Divergence, powerful candlestick pattern, Heikin-Ashi and Overbought/Oversold by RSI or Stochastic
Now let’s check some examples of this strategy.
The price fluctuated inside a channel on Gold chart. The Tenkan and Kijun price were over the Kumo, then price increased sharply and Tenkan crossed the Kijun to determine the Entry price of this bullish signal. The last candlestick on the Entry price shows the Stop Loss & Take Profit prices.
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In the next example, after price decreased sharply, it bounced up and Tenkan went higher than Kijun. Finally Tenkan passed Kijun toward bottom while both of them with the market price were below the Kumo. The Kumo has bearish trend and it is in bearish state to confirm the Sell order.
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Senkou Shift
This strategy is developed when Kumo changes it state. The location of price trend, Tenkan-Sen and Kijun-Sen are checked to deliver this signal. On the Bearish format Tenkan must be lower than Kijun and Kijun must be lower than the Kumo. On the Bullish format, Tenkan must be higher than Kijun and Kijun must be higher than the Kumo. The trend direction of Kumo after the shifting spot has powerful effect on the validity of generated signal.
The specifications of this strategy are as follows;
- Market type: Trend & Range market
- Symbols: Entire symbols
- Time-frames: All timeframes
- Entry Price:
- Buy Order: Over the Kumo, on the spot that Senkou A crosses B toward top
- Sell Order: Below the Kumo, on the spot that Senkou A crosses B toward bottom
- Stop Loss:
- Buy Order: Below the last candlestick on the shifting spot
- Sell Order: Over the last candlestick on the shifting spot
- Take Profit:
- Buy Order: Double or equal to length of the candlestick, over the entry price
- Sell Oder: Double or equal to length of the candlestick, below the entry price
- Confirmations: Hidden Divergence, powerful candlestick pattern, Heikin-Ashi and CCI oscillator
Now let’s check some examples of this strategy.
On GBPJPY, price has increased over the Kumo. Then Senkou-Span A crossed Senkou-Span B toward top to shift the Kumo to bullish state. The Price is higher than Tenkan, Tenkan is higher than Kijun and all of them are over the Kumo, so the Bullish signals is confirmed. The bullish trend of upcoming Kumo confirms the upward direction.
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The Oil price chart shows downward direction in which price, Tenkan and Kijun has proceeded toward bottom, lower than Kumo. On the Spot that Kumo changes its state, all other conditions are met to support the bearish generated signal. The future trend of Kumo is also bearish to confirm this signal.
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Kijun Cross
This strategy is developed if the price passes Kijun-Sen under some conditions. On the Bearish format, Tenkan, Kijun and price must be below the Bearish Kumo. On the Bullish format, Tenkan, Kijun and price must be over the Bullish Kumo.
The specifications of this strategy are as follows;
- Market type: Trend & Range market
- Symbols: Entire symbols
- Time-frames: All timeframes
- Entry Price:
- Buy Order: Over the bullish Kumo, where price crosses Kijun toward top
- Sell Order: Below the bearish Kumo, where price crosses Kijun toward bottom
- Stop Loss:
- Buy Order: Below the last candlestick on the breakout spot
- Sell Order: Over the last candlestick on the breakout spot
- Take Profit:
- Buy Order: Double or equal to length of the candlestick, over the entry price
- Sell Oder: Double or equal to length of the candlestick, below the entry price
- Confirmations: Hidden Divergence, powerful candlestick pattern, Heikin-Ashi and CCI oscillator
Now let’s check some examples of this strategy.
On upward trend of EURUSD, price has bounced back under the Kijun-Sen and then it crossed the Kijun toward top completely to specify the Buy signal. The price, Kijun and Tenkan-Sen are over the bullish Kumo to confirm the upward trend.
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The next example shows bearish signal in which price crossed the Kijun-Sen after it increased higher than Kijun. Considering that Tenkan, Kijun and price are lower than Kumo and Kumo is in bearish state then this bearish signal is generated.
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Chikou Span
This strategy is developed when Chikou Span crosses the price under some conditions. On the Bearish format, price must be below the Bearish Kumo. On the Bullish format price must be over the Bullish Kumo.
The specifications of this strategy are as follows;
- Market type: Trend & Range market
- Symbols: Entire symbols
- Time-frames: All timeframes
- Entry Price:
- Buy Order: Over the bullish Kumo, where Chikou passes the price toward top
- Sell Order: Below the bearish Kumo, where Chikou passes the price toward bottom
- Stop Loss:
- Buy Order: Below the last candlestick on the breakout spot
- Sell Order: Over the last candlestick on the breakout spot
- Take Profit:
- Buy Order: Double or equal to length of the candlestick, over the entry price
- Sell Oder: Double or equal to length of the candlestick, below the entry price
- Confirmations: Hidden Divergence, powerful candlestick pattern, Heikin-Ashi and CCI oscillator
Now let’s check some examples of this strategy.
On the Gold chart, Chikou Span crossed the price trend while both of them are over the Kumo. The bullish state of Kumo also confirms this bullish signal.
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In the next example, price decreased sharply below the Kumo. After some fluctuations, Chikou Span passed the price toward bottom to confirm the probable future bearish trend. Another confirmation was generated after price crossed the Kijun-Sen toward bottom.
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Kumo Breakout
When price proceeds toward the Kumo and passes both Senkou-Span A & B then this strategy will generate a signal. On the bullish format, Tenkan-Sen should be over the Kijun-Sen. In the bearish format, Tenkan-Sen must be below the Kijun-Sen.
The specifications of this strategy are as follows;
- Market type: Trend & Range market
- Symbols: Entire symbols
- Time-frames: All timeframes
- Entry Price:
- Buy Order: Over the Kumo, where price passes the Kumo toward top completely
- Sell Order: Below the Kumo, where price passes the Kumo toward bottom completely
- Stop Loss:
- Buy Order: Below the last candlestick on the breakout spot
- Sell Order: Over the last candlestick on the breakout spot
- Take Profit:
- Buy Order: Double or equal to length of the candlestick, over the entry price
- Sell Oder: Double or equal to length of the candlestick, below the entry price
- Confirmations: Hidden Divergence, powerful candlestick pattern, Heikin-Ashi and CCI oscillator
Now let’s check some examples of this strategy.
On the GBPUSD chart, Price increased inside the Kumo and passed it with a powerful bullish candlestick due to thin body of Kumo. The Close Price of the candlestick is over the Kumo so the bullish signal is generated where Tenkan-Sen is higher than the Kijun-Sen.
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The next example is on the Oil chart. The price has decreased sharply until it passed the thin Kumo toward bottom with a single powerful candlestick. Tenkan-Sen moved lower than Kijun-Sen as well. The bearish signal was generated with good confirmations.
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Combo
This strategy is the combination of mentioned strategies if they have generated signals with the same Entry & Exit prices at the same time.
The Gold price has crossed Kijun-Sen toward top while Kijun, Tenkan and price were over the bullish Kumo. At the same time Chikou-Span passed the price toward top, where price was over the bullish Kumo, to confirm upward signal. The two concurrent signals confirmed this strategy.
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On the next example, Tenkan-Sen passed the Kijun-Sen toward bottom below the bearish kumo. Also Chikou-Span crossed the price toward down to confirm the bearish signal. These two concurrent signals with same Entry& Exit prices developed this strategy.
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Notices
You can download PFOREX Assist app for iOS and other platforms devices to receive these signals instantly, however I have to insist that all the services provided PFOREX are as information, not as suggestion nor advice.
That concludes this session, until next time and another session, take care.