I Talked in previous article about Bollinger Bands Indicator you can read it through this link
Today I will explain Ichimoku Kinko Hyo indicator and how to use it in Forex trading
Ichimoku Kinko Hyo Indicator
The Most of Beginner Traders at Forex and once they look at to form this Japanese indicator on chart ,they think that the indicator is difficult to learn , but with Money Wolves nothing difficult ,and we will learn this indicator and will trade with it as a professionals
: The Short Name for The Japanese Indicator is (IKH) and It Means
Ichimoku = Quick Look
Kinko = Balanced
Hyo = Chart
In English (Ichimoku Kinko Hyo) = Balanced Quick Look on the Chart
Note : It's preferable use this indicator with frame time 1H , It works well with this frame time
This Indicator from the important indicators in technical analysis , and most of traders depend on it as a great technical tool without using another any technical indicator and that because that the indicator provides multiple information like
Determining the prices trend
Determining the power of trend
Determining the resistance and support levels
Determining the areas of buying signals and selling signals
You can add the Japanese indicator IKH on the chart at Metatrader by clicking on insert then oscillators then Ichimoku Kinko Hyo Indicator
The Components of Japanese Indicator IKH
We want to draw your attention that the Japanese indicator consists of 5 lines , we will explain these lines one after another to be the explanation easy to understand the mission and function of each line of the Japanese indicator and it benefit in the technical analysis
: Firstly : The Lines of Cloud Area
?How to determine the prices trend
The Upper cloud line (UP Kumo) The Orange Line -
The Lower cloud Line (Down Kumo) The Purple Line -
Please Notice that the area between the two lines called (cloud) , if the location of upper cloud line higher than the lower cloud line ,and the colour of the cloud is orange That means there is a possibility of a rise in prices temporarily , if the lower cloud line moves above of the upper cloud line that's mean that the cloud will colored purple line That means there is a possibility of a fall in prices temporarily
: We can determining the trend by watching the locations of candlesticks of cloud location
If The candles located lower than cloud area that means that the trend will be bearish -
If The candles located higher than cloud area that means that the trend will be bullish -
?How to determine the levels of support and resistance
We can determine what if the lines of the cloud support or resistance depending on the movement of Japanese candlesticks and the location of cloud
If The candles tend from bottom to top and at facing the upper line of cloud so the upper line of cloud works as resistance line
If If The candles tend from top to bottom and at facing the upper line of cloud so the upper line of cloud works as support line
If The prices of candles traded above of cloud area ,the orange line considered first support line and the purple line considered second support line
If The prices of candles traded under cloud area ,the purple line considered first resistance line and the orange line considered second resistance line
Secondly : Japanese Moving Lines
Here very important note ...we will edit the settings of indicator as below as you see in the picture
Senkou Span : Very slow moving - the period : 48 candles
Tenkan Sen : Very fast moving - the period : 7 candles
Kijun Sen : Slow moving - the period : 24 candles
The Green Line : Chikou Span
Chikou Span used in determining the trend of prices , and once the green line above of cloud area that's mean that the prices move in bullish . if the green line was moving under cloud area that's mean that the prices move in bearish
?How to trade using Ichimoku Kinko Hyo Indicator
: Strategy using Ichimoku Kinko Hyo Indicator
We will depend in this strategy on using the red line Tenkan and the blue line Kijun Sen according to previous settings
Selling Signal
If the red line tends to bottom and crosses the blue line
If the cross is above of cloud area = strong selling signal = The selling from the top
First condition : The candles located above of the orange cloud
Second condition : the orange line must be in the situation of support line
The Take profit : The orange line or support line
Buying Signal
If the red line tends to top and crosses the blue line
If the cross is under cloud area = strong buying signal = The buying from the bottom
First condition : The candles located under the purple cloud
Second condition : the purple line must be in the situation of resistance line
The Take profit : The purple line or resistance line
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