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BITCOIN PRICE: 8,232.14 HIGH: 8,232.14 LOW: 6,192.89
If you want to invest in or trade cryptocurrency, a powerful predictive tool that is often overlooked is th
Ichimoku Kinko Hyo. The Ichimoku Kinko Hyo method originates from Japan and has been under-utilized
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professionals in the West due to the lack of translation and guidance on how to actually use it, with mos
dismissing it as an exotic indicator.
It is only in the past decade or so that Westerners have started to understand the power of Ichimoku Kinko Hy
This indicator works very well for BTC-USD and other cryptocurrencies, as well as working successfully for Asia
trading in stocks, commodities, and futures. Ichimoku Kinko Hyo translates into English as ‘equilibrium chart a
You can take a quick glance at the chart and immediately find the balance point, or ‘equilibrium zone’ for the a
question. Invented by Goichi Hosoda, a journalist, he released the Ichimoku system to the public in 1968 after h
recruited a group of students to run simulations by hand to test the system for two decades.
The Ichimoku system allows you to identify breakouts and jump on an ongoing trend. Moreover, it can give sig
enter trades and allows you to gauge momentum.
While the indicator is made up of four components, they all must be assessed relative to the market price to u
what is going on in the market. Use the components jointly to form an integrated whole picture of price action
be realized by just a glance.
At first, using this indicator can be daunting but after a while, it becomes very easy to use. You will then have
instant understanding of the strength of the current trend and momentum.
When using the Ichimoku Kinko Hyo, think in terms of equilibrium and disequilibrium. Since the market is a com
all individual, human traders, the market is a reflection of group behavior. Just as you cannot stay happy or a
forever, we must return to the mean, so does the market.
This brings us to the Ichimoku cloud or ‘Kumo’.
An Integrated Picture
Use all of the components together to form an integrated picture. The chart below shows a crossover of the Te
and Kijun Sen which provides a risky but highly profitable buy for BTC-USD.
This is further confirmed by the Chikou span when it moves above the Ichimoku cloud.
Also, at this point, the Chikou span is also above the previous price. Therefore, the integrated picture points to
upward trend, so we should wait for the market to find support before buying.
Longer time frames are better, providing more reliable signals such as the monthly, weekly, daily and 4-hour.
timeframes generate too much noise and provide less reliability and more opportunities for fake signals. You m
want to do mutli-timeframe analysis, which will help you get to grips with the Ichimoku technique. For instanc
watch the 4-hour chart, take actions on the 15 minute or 5 minute chart; if the 40hour chart leans bullish, we
for buy signals on the lower timeframes and take these entries.
The Ichimoku method is based on probabilities, and back-testing can give you a better indication of the risk yo
taking when acting on various signals. I personally like to wait for confirmation and execute lower risk, lower r
trades. Monthly and weekly closes provide information on longer trading sessions and these Ichimoku signals
invaluable. For instance, consider below the simple weak buy signal given by XEM-BTC, which was a hugely pro
trade for the first half of 2017. The weekly close was higher than the conversion line, a weak buy signal.
Also, you can combine this indicator with volume to generate a richer outlook. One disadvantage is that the Ic
system can be hard to get your head around at first and takes some practice. Also, a further disadvantage is t
does not explicitly state where to put a stop loss so you have to also find out how much risk you are willing to
whether
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risk is justified.
This guide was updated October 23, 2017, and will be updated with further examples/explanations in the near f
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I have been studying charts using Ichimoku Cloud and have a question I'd like to ask. I've found that
the next cloud sometimes switches from red (4H) to green(1D) depending on the timeframe, even th
candlesticks moves below/above of cloud. This is rather confusing because it's like looking at two dif
charts (bearish/bullish). You mentioned "Longer timeframes are better". So, that said, should I dism
timeframe and take the 1D instead?
Thank you.
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