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“Ichimoku Kinko Hyo” does not mean “May the pips be with you” in Japanese. Ichimoku Kinko Hyo (IKH) is a price momentum indicator that forecasts future levels of support and resistance. It’s also worth noting that this indicator is most commonly utilized on JPY pairings. 

To broaden your Japanese vocabulary, Ichimoku means “a glimpse,” kinkome means “equilibrium,” and hyo means “chart.” 

When you put it all together, Ichimoku Kinko Hyo means “a peek at an equilibrium chart.” 

There are a few of things you should know about this indication first:

• Ichimoku may be used for any tradeable asset in any time frame. (Originally, it was used to exchange rice!) 
• In both rising and declining markets, Ichimoku can be employed. 

Ichimoku isn’t an option, when there is no evident pattern. When the market is trading sideways, choppy, or trendless. 

When the price oscillates on both sides of the cloud, you know it’s trendless. 

Kijun Sen: This is calculated by averaging the highest high and lowest low over the previous 26 periods, and is also known as the standard line or baseline. 

Tenkan Sen: Also known as the turning line, the Tenkan Sen is calculated by averaging the highest high and lowest low over the previous nine periods. 

The Chikou Span is also known as the trailing line. It’s today’s closing price, but it’s been plotted 26 periods back.

The first Senkou line is calculated by averaging the Tenkan Sen and the Kijun Sen, and it is drawn 26 periods ahead. 

The second Senkou line is calculated by averaging the highest high and lowest low over the previous 52 periods, then plotting them 26 periods forward.

How to Trade Using Ichimoku Kinko Hyo

Senkou 

The top line acts as the first support level if the price is over the Senkou span, while the bottom line serves as the second support level. 

The bottom line serves as the first resistance level when the price is below the Senkou span, while the top line serves as the second resistance level.

Kijun Sen

Meanwhile, the Kijun Sen serves as a predictor of price movement in the future. 

If the price is over the blue line, it is possible that it will continue to rise. 

If the price falls below the blue line, it may continue to fall.

Tenkan Sen

Meanwhile, the Kijun Sen serves as a predictor of price movement in the future. 

If the price is over the blue line, it is possible that it will continue to rise. 

If the price falls below the blue line, it may continue to fall.

Chikou Span

Finally, a buy signal is generated when the Chikou Span or the green line crosses the price in a bottom-up direction. 

It’s a sell indication if the green line crosses the price from the top down. 

Here’s another version of the line-filled chart, this time incorporating trade signals: 

Ichimoku may be utilized in every market and in any timeframe as a trend tracking indicator. 

It encourages trading in the direction of the trend, not against it, regardless of the market. 

Ichimoku can assist you to avoid entering the wrong side of the market by observing trends.