Understanding Ichimoku Kinko Hyo
Ichimoku Kinko
Hyo
translates as “one look equilibrium chart”. It was designed specifically for
quick and easy decision making. Ichimoku Kinko Hyo is a gauge that looks compound to
traders with 5 seconds attention spans. Once you know what it does, it makes
your crypto trading choices way
faster though. Mastering Ichimoku Cloud transaction really brings you one step
closer to the actually realistic goal of crypto trading: Creating high-probability
verdicts without costing you your whole day inspecting your Trading View
charts.
Ichimoku Cloud Lines Explained
The
Senkou and The Kumo
“Senkou span” is the name for the
borders of the filled cloud, or “Kumo cloud”. The span is filled with green
color in case the market is bullish. It will turn red in bearish markets, when
the two spans swap.
Senkou lines are major
support/resistance areas - they attract the price. Traders set their entries,
exits and stops around them - usually leveraging additional information from
other indicators.
The TK
lines and The TK Cross
The “TK lines”, or Tenken and Kinjun,
are the balance lines - fast and slow moving averages.
They are moving averages, so traders
will look for their cross when they are looking for a trend reversal. Because of
their names, this cross is called “TK cross”.
Nonetheless, TK lines are also
important when there is no cross in sight. If the price sticks around them, it
signals that the asset is neither overhyped nor underpriced. If the price
action travels very far from the TK lines, it signifies the price is way out of
balance and a pullback is likely, but it is by itself not a trigger to open a
position for the pullback.
In more balanced markets the price
stays around these lines and traders watch how it is bouncing off them or
crossing them when they are looking for a good entry.
The Chinkou
The “Chinkou” span is a lagging
indicator, use it to confirm a trend strength. Chinkou line above the candles
means the market is strong. When there is a strong action and the lagging line
crosses the candles, it is a sign the trend is weakening and becoming
undecided.
Stay tuned for tomorrows blog to understand how to
read the Ichimoku
Kinko Hyo.
Comments
Post a Comment