TECHNICAL ANALYSIS
FX
Ichimoku Kinko Hyo Te Art of the Chart
Ichimoku Kinko Hyo is a
multifunctional visual trend following charting system. It has been described as ”the king of indicators”. Trading or analyzing with it is a kind of high-level art. Using Ichimoku, it is possible to get the whole picture of the market, including trend direction, the main support/resistance levels, and exact entry or exit points. Furthermore it helps to define the strength of a signal. Te system can be used successfully for all markets and on all time frames - although it seems that the best performance is shown on the higher timescales. Although it is widely used and very popular in Japan, Ichimoku Kinko Hyo is an over- mystified and still nearly unknown technique in the Western world.
To understand how to use the Ichimoku Kinko Hyo indicator to analyze currency moves, please refer to FX Trader Magazine’s introductory article (in the October-December 2010 issue).
MAJORS ANALYSIS During
the last three months,
most USD pairs were in a ranging period. It is explainable by the end of year low volume, and also with the fact that the Weekly USDX was moving in the body of the Kumo cloud at this time. Let’s see how the Ichimoku system indicated the choppy market on the majors.
EURUSD Retrospect On the EURUSD Monthly chart
the price was moving below the Kumo cloud in the last three months. In October it tried to break out from the Kumo on the
upside, but the breakout
was unsuccessful and the price continued it’s way down, below the cloud. In November the price also crossed down the strong support Kijun-Sen line and December also opened below the Kijun-Sen level.
On the Weekly EURUSD chart October opened in the body of the Kumo, that is the sign of a range and choppy market. The
Figure 1: EURUSD Monthly FX TRADER MAGAZINE January - March 2012 77
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