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Thread: IchiMoku Magic

  1. #1
    Legend peat's Avatar
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    Default IchiMoku Magic

    Worthy of its own thread. I think so.


    I have been mentally backtesting the Ichi weekly last night... on Eur/Chf and Eur/GBP

    Like all lagging indicators it picks up the major movements, but can be jolted around a bit. Chikou span sometimesacts as a good take profit indicator ie it is the first to turn but sometimes it contraindicates for a long time.

    The Ichi Weekly timeframes can be a bit daunting in that a 100 pips is just noise. Entry and exit points become subjective enough to make a huge difference

    Certainly you will be there for the major moves , tho for instance your long would have been taken out a fortnight after the October low of 1.25 on Eur/Usd and hence missed a big chunk of the recent 700 pips with the weekly just crossing over last week at about 1.30.

    My platform doesnt have a monthly timeframe so I cant look at that as Arco has recently on the NZD/USD but weekly would have been long since Aug @ around .65 and you would have got most of the 700 pips shorting it earlier this year, tho chikou would have taken you out way too soon as it seems to do a lot. I dont really get this 22 day lagging close thing. It just appears as a flat line for the last 22 periods ??

    So its no holy grail , but when it all comes together (the crossover above the cloud , with the chikou up top) theres some great long term entry's.
    For clarity, nothing I say is advice....

  2. #2
    action-reaction arco's Avatar
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    Good idea Peat

    Heres an Ichimoku chart with its components (Senkou Span creates the Kumo or Cloud).



    arco





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    Legend peat's Avatar
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    I'm working on a coherent strategy for using the Ichimoku here, but of course its subject to modification. I'm quite happy for comments on this especially if you think I've outrightly misinterpreted something. Here it is for now.





    Ichimoku Strategy


    Choose a time frame....

    short term = 1 hour periods ; med term = daily ; long term = weekly.
    This needs to be consistent as of course diff time frames will give different signals and of course they may even contradict.


    Ideally you need to be able to have 2-3 contracts open when all factors combine (without breaking your money management rules!)



    Tenkan above or below Kijun determines direction of trade. Buy or sell on crossover of these - A cross above cloud is more meaninful
    But only when chikou is on the same side of price as your direction of trade

    When Chikou crosses {i.e current close is lower (for a long trade) / higher (for a short trade) than the close of 22 periods ago} take partial profit

    (but leave one for more, as there often is)


    Close final position when tenkan turns against the opposite direction of the trade


  4. #4
    Legend peat's Avatar
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    quote:Originally posted by arco and quoted here by peat to bring all the info together


    The Ichimoku Kinko Hyo was developed by Goichi Hosoda, a Japanese newspaper writer, writing under the pen name "Ichimoku Sanjin." He developed this charting technique before World War II, and offered it to the public when he published his book in 1969.

    Ichimoku translates as "a glance" or "one look." Kinko Hyo translates as "the table of equilibrium" or "balance table." Hence a chart displaying this indicator provides a broad look at the prices in a single view. You should be able to look at the chart and know at a glance whether to buy or sell.

    Three key time periods are used to calculate the five individual plots used in the indicator. These times periods are based on the trading conditions at the time the indicator was created: Japan in the 1930's. At the time, a trading week was six days instead of the five days we are used to today. Some traders may wish to alter the time periods to reflect the change in trading days.

    9 periods = one and a half weeks (now 7.5 periods. use 7 or 8)
    26 periods = one month (now 22 periods)

    52 periods = two months (now 44 periods)

    The Ichimoku Kinko Hyo indicator is composed of the following five plots, in addition to the closing prices.

    Tenkan-sen. The standard line. This plot provides signals when paired with the Kijun-sen. The default periods for this plot is 9. The calculation for this plot is (Highest High + Lowest Low)/2. The highest high is the highest high over the last specified number of time periods. By default, this is the highest high of the last 9 periods. The other highest highs and lowest lows are calculated the same way.

    Kijun-sen. The turning line. This plot provides signals when paired with the Tenkan-sen. The default periods for this plot is 26. The calculation for this plot is also (Highest High + Lowest Low)/2. However, the values are taken from a 26 periods time frame instead of a 9 periods time frame.

    Senkou Span A. The first span. This plot creates the Kumo (cloud) when paired with Senkou Span B. The default periods for this plot is 52. The calculation for this plot is (Tenkan-sen + Kijun-sen)/2.

    Senkou Span A. The second span. This plot creates the Kumo (cloud) when paired with Senkou Span A. The default periods for this plot is 52. The calculation for this plot is (Highest High + Lowest Low)/2.

    Chikou Span. The delayed line. This plot is simply the close plotted the desired number of time periods in the past. The default periods for this plot is 26. In this case, today's close would be plotted 26 days ago.

    The Ichimoku indicators are used together as one set of signals. If the signals do not agree, the chart is unreliable. When all three signals are in agreement, the signal is strong.

    Tenkan-sen / Kijun-sen. A buy signal is generated when the Tenkan-sen crosses above the Kijun-sen. A sell signal is generated when the Tenkan-sen crosses below the Kijun-sen. The Tenkan-sen and Kijun-sen can be used as support and resistance.

    Senkou Span A / Senkou Span B. The area between the two Spans is the Kumo, or cloud. A buy signal is generated when the close crosses above the cloud. A sell signal is generated when the close crosses below the cloud. Near the intersections of Span A and Span B, the market has a tendency to become chaotic. The Senkou Spans can also be used as support or resistance. When the close is above the cloud, the Spans act as two levels of support. When the close is below the cloud, the Spans act as two levels of resistance.

    Chikou Span / Close. A buy signal is generated when the Chikou Span crosses above the close. A sell signal is generated when the Chikou Span crosses below the close.


    regards - arco




  5. #5
    action-reaction arco's Avatar
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    There was an article on Ichimoku some time ago in S & C written by Ken Muranaka

    Heres the link..............

    http://www.forex-books.com/articles/techan/ichimoku.pdf

    arco



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    Oanda fxgame (which I use) did an upgrade over the weekend.
    It now includes Ichimoku

  7. #7
    action-reaction arco's Avatar
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    Thanks Peat

    Also now available on FXtrade.

    Looks very interesting, and I will be testing out the system on the lower time frames to see if it has any merit.

    arco


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    action-reaction arco's Avatar
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    Something that does not seem to be mentioned on many Ichi information documents is the fact that the clound (Kumo) bounderies (Senkou A/B) are used as support/resistance figures.

    Check out the charts on this PDF to see how its used.

    http://buymeridia.info/images/ichimoku.pdf

    arco



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    Legend peat's Avatar
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    Thats mentioned in your quote that I requoted a few entries above Arco, and that is certainly a useful part of it.
    Look at Eur/Gbp today using the hourly, its bounced off the edge of the Kumo several times.

  10. #10
    action-reaction arco's Avatar
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    Trading inside the cloud.......Kumo Surfing

    from the Japanese translation............

    To trade inside the cloud (which should be big enoung) we are using Tenkan-sen line following the direction of the line and trading using Chinkou Span line signals : if Chinkou Span is crossing the line from below to upward price curve we have the signal to buy. and from above to below-signal to sell. In this case we will have stop loss levels out of cloud and profit levels will be the borders of the cloud. Thus, we enter using Chinkou Span. we have 638,804 levels somewhere outside the cloud. we have prit levels which are of the borders of the cloud. Or we may exit if Tenkan-sen line was changed the direction; if we have an other Chinkou Span line signal; if the price is one of the cloud crossing the lines.
    The most strong signals for this indicator were observed on W1, D1 and H1 timeframes as the following:The most strong signals were observed on W1 for this indicator. D1 and H1 timeframes as the following :
    - the price curve is crossing the Senkou Span B line breaking this resistance line;- The price curve is crossing the line breaking Senkou Span B of this resistance line;
    - Chinkou Span line signals;- Span line signals; Chinkou
    - 3 line signal (Tenkan-sen, Kijun-sen and Senkou Span B lines are going in horizontal way above each other);- 3 line signal (Tenkan-sen. Kijun-sen Senkou Span B and horizontal lines are going in way above each other);
    - gold and dead crosses.- Gold crosses and dead.


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