The value of the Ichimoku analysis is increasing day by day. This is a well-known Western form of technical analysis. This analysis was introduced in the 1960s by Goychi Hosoda. It is mainly based on a Japanese candlestick. This allows traders to understand the current state of the Forex market. This analysis is also a very popular indicator of support and resistance points. On the charts it looks very complicated, but it is easy to understand. This is the greatest strength of Ichimoku’s analysis. You just need to take the time to master it. Then it will allow you to easily identify the upcoming changes in the market. Obviously, you can predict future currency prices. This allows traders to have a long-term perspective on the market.
Components of Ichimoku analysis:
Basically you can find five overlay metrics on the Ichimoku chart. These are:
Basically it’s a turning line. The average value of the previous nine periods is used to calculate it. The average value is the average value between the highest point and the lowest point of the previous 9 periods. The average value of the average level is not a moving average. There is a major difference between them. It doesn’t look as smooth as the moving average.
The baseline is called Kijun-sen. The average value of the previous 26 periods is correlated with Kijun-sen. You use it to calculate Kijun-sen.
Senkou Span A:
This is the main or leading interval A. You can calculate it given the average of the above-mentioned turning lines and baseline (Tenkan-Sen and Kijun-Sen).
Senkou Span B:
In fact it is a leading or cloud interval B. You need to consider the average value for the previous 52 days and plot this value as a value for the 26 days ahead.
Chiku’s Swing: Chiku’s swing is a backward line. This is the closing of the currency value on 26 days ago. It is necessary to remember that Chikou Span does not consider average value.
This is the most important part of the Ichimoku chart. This is the part between Span A and Span B. If the price touches on this Kumo, you can find opportunities to trade. This is the most important tool in Ichimoku analysis for entering or exiting a trade.
Like all other analytical charts, this Ichimoku analysis also has weaknesses. It works poorly on different days of the Forex market.