Ichimoku Kinko Hyo Technical Indicator is predefined to characterize the market Trend, Support and Resistance Levels, and to generate signals of buying and selling. This indicator works best at weekly and daily charts.
When defining the dimension of parameters, four time intervals of different length are used. The values of individual lines composing this indicator are based on these intervals:
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Tenkan-sen shows the average price value during the first time interval defined as the sum of maximum and minimum within this time, divided by two; -
Kijun-sen shows the average price value during the second time interval; -
Senkou Span A shows the middle of the distance between two previous lines shifted forwards by the value of the second time interval; -
Senkou Span B shows the average price value during the third time interval shifted forwards by the value of the second time interval.
Chinkou Span shows the closing price of the current candle shifted backwards by the value of the second time interval.
The distance between the Senkou lines is hatched with another color and called "cloud". If the price is between these lines, the market should be considered as non-trend, and then the cloud margins form the support and resistance levels:
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If the price is above the cloud, its upper line forms the first support level, and the second line forms the second support level; -
If the price is below cloud, the lower line forms the first resistance level, and the upper one forms the second level; -
If the Chinkou Span line traverses the price chart in thebottom-up direction it is signal to buy. If the Chinkou Span line traverses the price chart in thetop-down direction it is signal to sell.
Another kind of using the Kijun-sen is giving signals. Signal to buy is generated when the Tenkan-sen line traverses the Kijun-sen in the bottom-up direction. Top-down direction is the signal to sell.
Download: Ichimoku.mq4
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