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

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

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

Ichimoku Kinko Hyo Indicator

Ichimoku Kinko Hyo is a Japanese charting technique that was created 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 and help the trader to figure out the most suitable time to enter or exit the market.

Ichimoku Kinko Hyo EA Setup

Calculation

This indicator consists of five lines plotted 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 price periods

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

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

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

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

Kumo: Cloud: area between Senkou Span A & B

Forex Trading Analysis and Generating Signals

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

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

However, there are different levels of strength for the buy & sell signals generated.

Technical Analysis - Ichimoku Kinko Hyo EA Setup

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

Very strong buy signal.

Bearish cross-over signal forms below the Kumo (clouds),

Very strong sell signal.

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

A bullish cross-over 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 & Resistance Levels

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

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

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

• If the Chikou Span is below the closing price of the last 26 periods ago and a sell short signal is given, then the strength of the Forex 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 the trend is to the upside, otherwise it is considered to be a weak buy signal.