The importance of Ishimoku analysis is growing every day. This is a well-known Western form of technical analysis. This analysis was introduced in the 1960s by Goichi Hosoda. It is based mainly 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 points of support and resistance. Although it looks very complicated on the charts, it is still easy to understand. This is the greatest strength of Ishimoku’s analysis. You just have to take some time to master it. It will then allow you to easily identify upcoming market changes. Obviously, you can predict future currency prices. This allows traders to have a long-term perspective on the market.
Components of Ishimoku analysis:
You can find basically five Ichimoku Chart overlay indicators. These are:
It’s basically a turn line. The average value of the previous nine periods is used for its calculation. The average value is the average value between the highest and the lowest point from the previous 9 periods. The average is not a moving average. There is a big difference between them. It doesn’t look smooth as a moving average.
The baseline is called Kijun-sen. The average of the previous 26 periods is correlated with Kijun-sen. You use it to calculate Kijun-sen.
Senkou Span A:
It is the main or leading interval A. You can calculate it by taking into account the average value of the above-mentioned turn line and baseline (Tenkan-sen and Kijun-sen).
Senkou Span B:
This is actually Leading or Cloud Span B. You have to take into account the average value of the previous 52 days and draw this value as a value for the 26 days ahead.
Chikou Span: Chikou Span is the lagging line. This is the final value of the currency from 26 days ago. You have to remember that Chikou Span does not report the average value.
This is the most important part of the Ishimoku chart. This is the part between Span A and Span B. When the price touches this Kumo, you can find trading opportunities. This is the most important trigger in Ichimoku Analysis for entering or exiting a trade.
Like all other analysis charts, this Ishimoku analysis also has a weakness. He performs poorly on different days in the Forex market.