Ichimoku Kinko Hyo Expert Advisor Setup - Setting Up Ichimoku Kinko Hyo Expert Advisor

Ichimoku Kinko Hyo Expert Advisor Setup - Setting Up Ichimoku Kinko Hyo Expert Advisor - A trader can come up with an Ichimoku Kinko Hyo Expert Advisor based on the Ichimoku Kinko Hyo indicator explained below.

Ichimoku Kinko Hyo Expert Advisor rules can be combined with other indicators to come up with other EA Bots that trade using rules based on two or more indicators combined to form a system.

Ichimoku Kinko Hyo Indicator

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 price & help the trader to figure out the most suitable time to enter or exit the market.

Ichimoku Kinko Hyo Expert Advisor Setup

Calculation

This indicator consists of five lines plotted using the midpoints of previous highs & lows. The five lines are calculated as follows:

1) Tenkan-Sen: Conversion Line: Red Line (Highest High + Lowest Low) / 2, for last 9 price periods

2) The Kijun-Sen: Base Line: Blue Line (Highest High + Lowest Low) / 2, for last 26 price periods

3) Chikou Span: Lagging Span: Green Coloured Line Today's close price plotted 26 price periods behind

4) The Senkou Span A: Leading Span A = (Tenkan-Sen + Kijun-Sen) / 2, plotted 26 price periods ahead

5) Senkou Span B: Leading Span B: (Highest High + Lowest Low)--/--2[Highest High + Lowest Low]--/--2, for the past 52 price periods, plotted 26 price periods ahead

Kumo: Cloud: area between Senkou Span A and B

Technical Analysis & Generating Signals

Bullish signal - Tenkan-Sen crosses Kijun-Sen from below.

Bearish signal - Tenkan-Sen crosses Kijun-Sen from above.

However, there are different areas of strength for the buy and sell signals generated.

Analysis - Forex Ichimoku Kinko Hyo Expert Advisor Setup

Bullish cross-over signal occurs above the Kumo (clouds),

Strong buy trade signal.

Bearish crossover signal occurs below the Kumo (clouds),

Strong sell signal.

If a bullish/ bearish crossover trading signal takes place within the Kumo (clouds) it's considered a medium strength buy or sell signal.

A bullish crossover that occurs below the clouds is considered a weak buy signal while a bearish cross-over that occurs above the clouds is considered a weak sell signal.

Support and Resistance Areas

Support and resistance levels can be predicted by presence of Kumo (clouds). The Kumo also can be used to identify the prevailing trend of the market.

• If price is above Kumo, the prevailing market trend is said to be upwards.
• If price is below Kumo, the prevailing market trend is said to be downwards.

The Chikou Span or Lagging Span is also used to determine the strength of the buy or sell signal.

• If the Chikou Span indicator is below the closing price of the last 26 periods ago and a sell short signal is given, then the strength of trend is downwards, otherwise the signal is considered to be a weak sell signal.
• If there is a bullish signal and the Chikou Span is above the price of the last 26 periods ago, then the strength of trend is to the upside, otherwise it's considered to be a weak buy trading signal.