Ichimoku Kinko Hyo Technical Indicator
Ichimoku Kinko Hyo is a Japanese charting technique that was created before by a Japanese newspaper writer, with the pen name of Ichimoku Sanjin.
- Ichimoku means "a glance" or "one look"
- Kinko means "equilibrium" or "balance"
- Hyo is the Japanese word for "chart"
Thus, Ichimoku Kinko Hyo means, "a glance at an equilibrium chart". Ichimoku attempts to identify the likely direction of bitcoin price & help the trader to determine the most suitable time to enter or exit the btcusd trading market.
Calculation
This indicator consists of five lines drawn using the midpoints of previous highs and lows. Five lines are calculated as follows:
1) Tenkan-Sen: Conversion Line: Red Line (Highest High + Lowest Low) / 2, for the last 9 bitcoin price periods
2) Kijun-Sen: Base Line: Blue Line (Highest High + Lowest Low) / 2, for the last 26 bitcoin price periods
3) Chikou Span: Lagging Span: Green Line Today's closing bitcoin price drawn 26 bitcoin price periods behind
4) Senkou Span A: Leading Span A = (Tenkan Sen + Kijun Sen) / 2, drawn 26 bitcoin price periods ahead
5) The Senkou Span B: Leading Span B: (Highest High + Lowest Low) / 2, for the past 52 bitcoin price periods, drawn 26 bitcoin price periods ahead
Kumo: Cloud: area between Senkou Span A & B
BTCUSD Analysis & How to Generate Trading Signals
Bullish signal - Tenkan-Sen crosses the Kijun-Sen from below.
Bearish signal - Tenkan-Sen crosses the Kijun-Sen from above.
However, there are different areas of strength for the buy & sell bitcoin signals generated.
Technical Analysis in BTCUSD Trading
Bullish crossover signal forms above the Kumo (clouds),
Very strong buy bitcoin signal.
Bearish crossover signal forms below Kumo (clouds),
Very strong sell bitcoin signal.
If a bullish/ bearish crossover trading signal takes place within the Kumo (clouds) it is considered a medium strength buy or sell bitcoin signal.
A bullish crossover that occurs below the clouds is considered a weak buy cryptocurrency signal while a bearish crossover that occurs above the clouds is considered a weak sell bitcoin signal.
Support and Resistance Levels
Support & resistance levels can be predicted by the presence of Kumo (clouds). Kumo can also be used to identify the current trend of the btcusd trading market.
- If bitcoin price is above the Kumo, the prevailing market trend is said to be upwards.
- If bitcoin price is below the Kumo, the prevailing market trend is said to be downwards.
Chikou Span or Lagging Span is also used to determine the strength of the buy or sell bitcoin signal.
- If the Chikou Span is below the closing bitcoin price of the last 26 periods ago and a sell short signal is given, then the strength of the trend is downwards, otherwise the signal is considered to be a weak sell bitcoin signal.
- If there is a bullish signal and the Chikou Span is above the bitcoin price of the last 26 periods ago, then the strength of the trend is to the upside, otherwise it is considered to be a weak buy bitcoin signal.
