Ichimoku Kinko Hyo
Ichimoku Kinko Hyo is a Japanese charting technique that was developed before by a Japanese newspaper writer, with the pen name of Ichimoku Sanjin.
- Ichimoku means "a glance" or "one look"
- Kinko means "equilibrium" or "balance"
- Hyo is the Japanese word for "chart"
Thus, Ichimoku Kinko Hyo means, "a glance at an equilibrium chart". Ichimoku attempts to identify the likely direction of gold price and help the xauusd trader to determine the most suitable time to enter or exit the gold market.
This xauusd indicator consists of five lines drawn using the midpoints of previous highs and lows. The five lines are calculated as follows:
1) Tenkan-Sen; Conversion Line; Red Line (Highest High + Lowest Low) / 2, for the last 9 gold price periods
2) Kijun-Sen; Base Line; Blue Line (Highest High + Lowest Low) / 2, for the last 26 gold price periods
3) Chikou Span; Lagging Span; Green Line Today's closing gold price drawn 26 gold price periods behind
4) Senkou Span A; Leading Span A = (Tenkan-Sen + Kijun-Sen) / 2, drawn 26 gold price periods ahead
5) Senkou Span B; Leading Span B; (Highest High + Lowest Low) / 2, for the past 52 gold price periods, drawn 26 gold price periods ahead
Kumo; Cloud; area between Senkou Span A and B
XAUUSD Technical Analysis and Generating XAUUSD Signals
Bullish signal- Tenkan-Sen crosses the Kijun-Sen from below.
Bearish signal- Tenkan-Sen crosses the Kijun-Sen from above.
However, there are different levels of strength for the buy and sell xauusd signals generated.
Bullish crossover signal occurs above the Kumo (clouds),
Very strong buy xauusd signal.
Bearish crossover signal occurs below the Kumo (clouds),
Very strong sell xauusd signal.
If a bullish/ bearish crossover signal takes place within the Kumo (clouds) it is considered a medium strength buy or sell xauusd signal.
A bullish crossover that occurs below the clouds is considered a weak buy xauusd signal while a bearish crossover that occurs above the clouds is considered a weak sell xauusd signal.
Support and Resistance Levels
Support and resistance levels can be predicted by the presence of Kumo (clouds). The Kumo can also be used to identify the current xauusd trend of the gold market.
- If gold price is above the Kumo, the prevailing market xauusd trend is said to be upwards.
- If gold price is below the Kumo, the prevailing market xauusd trend is said to be downwards.
The Chikou Span or Lagging Span is also used to determine the strength of the buy or sell xauusd signal.
- If the Chikou Span is below the closing gold price of the last 26 periods ago and a sell short signal is given, then the strength of the xauusd trend is downwards, otherwise the signal is considered to be a weak sell xauusd signal.
- If there is a bullish signal and the Chikou Span is above the gold price of the last 26 periods ago, then the strength of the xauusd trend is to the upside, otherwise it is considered to be a weak buy xauusd signal.