Ichimoku Kinko Hyo
Ichimoku Kinko Hyo Technical Indicator is predefined to characterize the market Trend, Support and Resistance Levels, and to generate signals of buying and selling. This indicator works best at weekly and daily charts.
When defining the dimension of parameters, four time
intervals of different length are used. The values of individual lines
composing this indicator are based on these intervals:
Tenkan-sen shows the average price
value during the first time interval defined as the sum of maximum and
minimum within this time, divided by two;
Kijun-sen shows the average price value during the second time interval;
Senkou Span A shows the middle of the distance
between two previous lines shifted forwards by the value of the second
Senkou Span B shows the average price value during
the third time interval shifted forwards by the value of the second
Chinkou Span shows the closing price of the current
candle shifted backwards by the value of the second time interval.
distance between the Senkou lines is hatched with another color and
called "cloud". If the price is between these lines, the market should
be considered as non-trend, and then the cloud margins form the support and resistance levels:
If the price is above the cloud, its upper line
forms the first support level, and the second line forms the second
If the price is below cloud, the lower line forms the first resistance level, and the upper one forms the second level;
If the Chinkou Span line traverses the price chart in the bottom-up direction it is signal to buy. If the Chinkou Span line traverses the price chart in the top-down direction it is signal to sell.
Kijun-sen is used as an indicator of
the market movement. If the price is higher than this indicator, the
prices will probably continue to increase. When the price traverses
this line the further trend changing is possible.
Another kind of using the Kijun-sen is giving signals. Signal to buy is generated when the Tenkan-sen line traverses the Kijun-sen in the bottom-up direction. Top-down direction is the signal to sell.
Tenkan-sen is used as an indicator of
the market trend. If this line increases or decreases, the trend
exists. When it goes horizontally, it means that the market has come
into the channel.
Full MQL4 source of Ichimoku Kinko Hyo is available in the Code Base: Ichimoku Kinko Hyo