Ichimoku Kinkō Hyō

[3] Ichimoku is a moving average-based trend identification system and because it contains more data points than standard candlestick charts, it provides a clearer picture of potential price action.

Ichimoku takes into consideration the factor of time as an additional element along with the price action, similar to William Delbert Gann's trading ideas.

In the Western world, it is solely known for its “Graphic Environment”, due to the fact that authors have not translated the original manual into English, German, nor Spanish.

However, Ichimoku is also integrated by three other theories that improve and enhance the indicator: Tenkan-sen (転換線) calculation: (highest high + lowest low)/2 for the last 9 periods.

This height represents volatility as larger price movements form thicker clouds, which creates stronger support and resistance.

Traders often look for Kumo Twists in future clouds, where Senkou Span A and B exchange positions, a signal of potential trend reversals.

In the realm of charting methodologies, Ichimoku clouds present a visually compelling technique, albeit not without its criticisms.

Rigorous backtesting conditions have revealed that Ichimoku tends to underperform the market index significantly, indicating potential limitations in its predictive power.