ChAPter 16 Ichimoku Charting and Analysis
L e a r nIn g O b j eCtIv e sAfter studying this chapter, you should be able to:■ Understand the proper application of Ichimoku analysis to price action
■ Calculate and derive all four mid‐range priced moving averages
■ Identify Ichimoku based resistive and supportive confluences
■ Identify the price filter characteristics inherent within Ichimoku charting
■ Understand the real meaning of equilibrium and balance in Ichimoku charting
■ Identify bullish and bearish Ichimoku‐based signals and triggers
■ Describe the various ways to initiate a trade based on the Ichimoku overlaysI
chimoku Kinko Hyo analysis is very rapidly gaining popularity in Western‐based
technical analysis. It offers traders and analysts a unique and powerful way of
reading current market behavior and also acts as a leading indicator of potential
future support and resistance. It is a surprisingly easy overlay indicator to use
despite its complex appearance on the charts. Once mastered, it will afford practi-
tioners a fast and straightforward way of determining market regime changes and
future market reaction levels.16.1 Constructing the Five Ichimoku Overlays
Goichi Hosoda, also known as Ichimoku Sanjin, introduced his work based
on Japanese candlestick charting in the late 1960s. It is basically a candlestick
chart superimposed with five overlays comprising moving‐average‐type overlay
indicators. Ichimoku Kinko Hyo loosely translates into single glance balance or
one glance equilibrium chart. Goichi Hosoda was interested in presenting a way