the hAnDbook of teChnICAl AnAlysIsone‐third odd harmonic cycle within the Ichimoku moving average setup. That is
why the Tanken‐sen is so unique among the Ichimoku overlays, in that it is the only
moving average that attempts to capture market action that is not related to the set
of even harmonic cycles. Senkou Span A is also special in this respect as it captures
whatever remaining cycles result from the interaction or superposition of odd and
even harmonic waves. Senkou Span A therefore captures the harmonics that reside
in between odd and even harmonics, referred to as partials. In essence, Ichimoku
charting is in reality a very sophisticated market cycle forecaster, capturing the full
spectrum of the market’s odd, even, and partial harmonic behaviors.
Because Ichimoku charts employ mid‐range pricing, this implies that there
exists a direct relationship between Ichimoku balance lines and Fibonacci or
Gann 50 percent retracements. This is very apparent, especially with the fre-
quent convergence of the Senkou Span B mid‐range price and the Fibonacci
50 percent retracement level. In Figure 16.24 we see a bullish or supportive con-
fluence comprising the Senkou Span B balance line and the Fibonacci 50 percent
retracement.
It is interesting to also note that the moving average convergence‐divergence
(MACD) uses the same 12 and 26 lookback periods as the Ichimoku overlays. The
difference between the Kijun‐sen and the 26‐period moving average used in the
MACD is that the moving average used in the MACD is an exponential moving
average of closing prices, whereas the Kijun‐sen is a moving average of mid‐range
prices. The MACD only tracks the even harmonic cycles in the markets.
In summary, the Senkou Span B and Kijun‐sen attempt to capture even
harmonic cycles over both the two‐month and one‐month periods respectively,
while the Tenkan‐sen attempts to capture market action expressed in odd har-
monic cycles. The Senkou Span A bridges the gap by being in the unique posi-
tion of attempting to capture more complex market expression resulting from
the superposition or interaction of odd and even harmonic wave action. See
Figure 16.25.
FIgure 16.24 Senkou Span B Aligning with the Fibonacci 50 Percent Retracement Level.
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