The Ishimoku indicator is an excellent tool for technical analysis of Forex market. Today it is one of Forex 's favorite indicators for determining the trend line among traders.
The Ishimoku indicator was developed by Japanese trader Goichi Hosoda in the 1930s. Initially, all calculations on it were carried out manually. However, it was subsequently translated into an electronic version and today the machine works with it, offering the trader only the results of calculations presented on the chart.
Despite the fact that initially, this algorithm of technical analysis was developed exclusively for the stock market, over time it became successfully applied in the foreign exchange market Forex.
Characteristics of the Ishimoku indicator
Trading platform: TradingView
Time scale: any
Basic asset: any
Description of the Ishimoku indicator
The Ishimoku indicator is built directly in the graph window. It consists of several moving average curves, which we will describe below. So, this algorithm includes:
Tenkan-sen is the sum of the maximum and minimum over the period of time n1 divided by two.
Kijun-sen - same indicator, only for the period of time n2
Senkou Span A is the middle of the distance between the previous two lines, offset forward by the value of the second time period
Senkou Span B - average price over time period n3, offset forward by value of interval n2
Chinkou Span - indicator of the closing price of the candle with the offset backward by the value of the interval n2
The space between Senkou Span A and Senkou Span B lines is filled in on the forex hatch graph. The cloud formed shows lateral movement in the market, in which case cloud boundaries are levels of support and resistance.
If the current price is above the cloud, its upper bound becomes the first support level, the next line becomes the second level. Accordingly, if the price is below the cloud, the lower bound becomes the first level of resistance.
The signal for the purchase will be a bottom-up crossing of the price chart by the Chinkou Span line.
indicator Forex to an ishimok
A top-down intersection will be a sales signal.
How the ishimoku indicator works
The Kijun-sen line is used to determine market movement. If it is below the current price, it is more likely to rise.
The Tenkan-sen line identifies the market trend. If it moves along a horizontal line, the market is also in the side corridor.
Taken together, Ishimoku 's lines demonstrate the existing trend perfectly and respond in a timely manner to any market changes.
For binary option traders, Tenkan Sen, Kijun Sen, and the Ishimoku cloud are the most important. In principle, two main tools can be identified as part of this algorithm, which will provide signals for the purchase of contracts.
Trade signals to Ishimok
The first type of signals is a standard strategy using two moving averages, Kijun Sen and Tenkan Sen. When Tenkan is below Kijun and both of them are located under the price schedule, it is an uptrend. When they cross, when Tenkan is below Kijun, a signal appears to buy the Call option.
When crossing these same curves, when Kijun is below Tenkan, a signal appears to buy the Put option. A disadvantage of this method is the delay of such signals. This is typical of all moving averages.
Work with the Ishimoku cloud takes place according to the following principle. Trader is very interested in the moment of leaving the cloud. If the candle breaks the upper bound, a signal appears to purchase the Call option. When the candle breaks the lower boundary, it is possible to buy the Put option. Working inside the cloud is not recommended. It is also not recommended to search for signals when the price enters the cloud.
If you were interested in this indicator we recommend to also study the Bollinger Lanes.