The importance of Ichimoku analysis is growing day by day. It is a well-known Western form of technical analysis. This analysis was introduced by Goichi Hosoda in the 1960s. It is mainly based on a Japanese candlestick. It allows traders to understand the current situation in the Forex market. This analysis is also a very popular indicator of support and resistance points. Although it looks very complex on the maps, it is easy to understand. This is the greatest strength of Ichimoku analysis. You only need to dedicate yourself once to master it. It will then allow you to easily determine the upcoming changes in the market. Obviously you can predict future currency prices. It allows traders to have a long-term perspective on the market.
Ichimoku analysis components:
You can basically find five overlay indicators on the Ichimoku map. These are:
It is basically a line of rotation. The mean range value from the previous nine periods is used for the calculation. The mean range value is the average between the highest and lowest point in the previous 9 periods. The average value of the middle rank is not a moving average. There is a big difference between them. It doesn’t look as smooth as the moving average.
The base is called Kiyun-sen. The mean range value from the previous 26 periods is related to Kijun-sen. Use it to calculate Kijun-sen.
Senkou Span A:
This is the main or leading range A. You can calculate it taking into account the average value of the above-mentioned turning line and baseline (Tenkan-sen and Kijun-sen).
Senkou Span B:
This is actually the leading or Cloud Span B. You need to consider the mean range value from the previous 52 days and plot that value as a value for 26 days in advance.
Chikou Span: Chikou Span is a lagging line. This is the closing value of the currency back 26 days. You have to keep in mind that Chikou Span does not take into account the mean value.
This is the most important part of the Ichimoku map. It is the part between range A and range B. When the price touches this Kumo, you can find trading opportunities. It is the most important trigger in Ichimoku analysis for entering or exiting a store.
Like all other analysis maps, this Ichimoku analysis has weaknesses. It does poorly in the days of the Forex market.