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.
