Steemit Crypto Academy – Season 3 - Week 1 - Post for @kouba01

What is the Ichimoku Kinko Hyo indicator?

When it comes to crypto technical analysis for trading or investing on any asset, the Ichimoku Kinko Hyo indicator is one of the many technical indicator tools that is very popular and used by a lot of traders for technical analysis and is considered as one of the best indicators for new traders. The Ichimoku Kinko Hyo indicator is basically a technical indicator that is mostly used to determine the momentum along with future areas of support and resistance of any cryptocurrency asset. Quickly looking at the history of the Ichimoku Kinko Hyo indicator, it was basically or originally the creation of a Japanese newspaper writer with the main aim of combining different strategies into one technical indicator.

The English interpretation of ichimoku basically means one look and is also known as an all-in-one indicator, which was made so as to help traders (cryptocurrency traders) have to only make one look at the cryptocurrency chart to be able to determine momentum, support, and resistance. One of the main benefits and use of the Ichimoku Kinko Hyo indicator is for measuring momentum along with future areas of support and resistance of any cryptocurrency asset chart. The technical indicator is very useful for identifying trends and market movements.

What are the different lines that make it up?

When it comes to the Ichimoku Kinko Hyo indicator, there are 5 different components or lines that make up the Ichimoku Kinko Hyo indicator. These 5 lines are;

Tenkan-sen – This is also known interpreted as the conversion line. The Tenkan-sen line basically represents supports, resistance level and signal line in the chart. Calculating the Tenkan-sen line is basically done by doing the addition of the highest high and lowest low of the past 9 periods and when the addition is done, the result is divided by two.

Kijun-sen - This is also known interpreted as the base line. The Kijun-sen line basically represents key support and resistance level as well, however, the Kijun-sen line is great for confirming a change in trend in the market and also can be very useful to determine where to set trailing stoploss point. Calculating the Kijun-sen line is basically done by doing the addition of the highest high and lowest low of the past 26 periods and when the addition is done, the result is divided by two.

Chikou Span - This is also known or interpreted as the lagging span. The Chikou Span is basically the current period’s closing price that is plotted on the chart 26days in the past. Chikou Span line is basically used for showing the possible support and resistance areas.

Senkou Span A - This is also known interpreted as the leading span A. The Senkou Span A is basically used for identifying future support and resistance areas. Calculating the Senkou Span A is basically done by doing the summation or addition of the tenkan-sen and the kijun-sen and when the addition is done, the result is divided by two and when the addition is done, the result is divided by two, and projecting the result 26 periods ahead.

Senkou Span B - This is also known interpreted as the leading span B. The Senkou Span B is very similar to the Senkou Span A in terms of what it is used for, but different in how it is calculated. In the Senkou Span B, the other edge of he kumo which was formed from the resulting line is basically used for identifying future support and resistance areas. Calculating the Senkou Span B is basically done by doing the summation or addition of the highest high and the lowest low on the previous 52 periods, and when the addition is done, the result is divided by two and projecting the result 26 periods ahead.

How to add the Ichimoku indicator to the chart?

Adding the Ichimoku indicator on any cryptocurrency chart is quite easy to do with the help of an amazing technical analysis tool trading view.

• Go to tradingview website https://www.tradingview.com and go to the indicators tab section and click on the indicators tab

• Go to the search bar section, on the search, search for Ichimoku Kinko Hyo

• Select the first one written Ichimoku Kinko Hyo by KivancOzbilgic

• Click on the Ichimoku Kinko Hyo by KivancOzbilgic area and click on the settings icon

On the default settings of the Ichimoku Kinko Hyo, there are two different sections – the inputs and the styles. The inputs section basically contains all the default parameters and values that can be changed. The styles sections contains all the different default visual styles that can be changed for visual preferences.

On the input section, the Tenkan-sen has a value of 9, the Kijun-sen length has a value of 26, the Chikou Span has a value of 26, the Senkou Span A has a value of 26, the Senkou Span B has a value of 52. On the styles section, the Tenkan-sen has a default color of blue, the Kijun-sen length has a default color of red, the Chikou Span has a default color light purple, the Senkou Span A has a default color of green, the Senkou Span B has a default color of dark purple.

• On the Ichimoku Kinko Hyo settings, you can change the inputs and also the styles based on your desired needs.

And should it be changed or not?

In my opinion, it depends on the scenario or situation that might determine whether the default settings should be changed. For the input section, all the parameters can be changed, however, the default settings does a great job without needing changing, but as always, nothing is static in the cryptocurrency space and also the market is very volatile, which means that there are certain situations and circumstances that might require the defaults inputs to be changed to achieve better results.

For the styles section, the default settings doesn’t need to be changed as the colours clearly differentiates the different lines, the styles are just for visual purposes. However, depending on individual preferences, the colours can be changed to any colours and also the line width can be changed to make it more visible in the chart, as clarity helps in better technical analysis.

How to use the Tenkan Sen line?

The Tenkan Sen is one of the most important components of the Ichimoku Kinko Hyo indicator and is very useful during the technical analysis process. On my chart, the Tenkan Sen line is the blue line and is considered the conversion line. It is the fast line in the indicator and it is derived by averaging the highest high and the lowest low for the past nine periods. What this means is that its primary use is to measure price volatility or price changes of any cryptocurrency asset over the past 9 periods.

In the cryptocurrency world, since the Tenkan Sen is an indicator of the market trend, it is mainly used to measure the short term trend in the cryptocurrency market over a particular period and also used to determine minor support and resistance areas in the chart. To determine the market direction, careful attention is paid on the Tenkan Sen line. If the Tenkan Sen line which is the blue line on the chart is moving up or down, it signals that the cryptocurrency market is either moving in an uptrend direction or downtrend direction. On the chart, the price is above the Tenkan Sen line shows that the market is in an uptrend direction in the short term. Also, the price below the Tenkan Sen line shows that the market is in a downtrend direction.

How to use the Kijun Sen line?

The Kijun Sen is also one of the most important components of the Ichimoku Kinko Hyo indicator and is very useful during the technical analysis process. On my chart, the Kijun Sen line is the red line and is considered the base line. The Kijun-sen line is great for confirming a change in trend in the market and also can be very useful to determine where to set trailing stoploss point. Calculating the Kijun Sen line is basically done by taking the midpoint of the highest high and the lowest low over the previous 26 periods.

In the cryptocurrency world, since the Kijun Sen line is an indicator of future market movement. If the Kijun Sen red line is above the Tenkan Sen blue line, it signals that the market is in a downtrend direction. The Kijun-sen line is great for confirming a change in trend in the market and also can be very useful to determine where to set trailing stoploss point.

How to use them simultaneously?

The Tenkan Sen and Kijun Sen can be used simultaneously. Both the Tenkan Sen and Kijun Sen can be used simultaneously for confirming a change in trend in the market. On the chart, Kijun Sen red line is above the Tenkan Sen blue line which signals that the market is moving in a downtrend direction. Also, the Kijun Sen red line is below the Tenkan Sen blue line which signals that the market is moving in an uptrend direction.

What is the chikou span line

The chikou span line also known or interpreted as the lagging span. The Chikou Span is basically the current period’s closing price that is plotted on the chart 26days in the past. Chikou Span line is basically used for showing the possible support and resistance areas. The chikou span line is used for determining whether the market is bullish or bearish. If the chikou span line is above the price, it indicates that the market is bullish. If the chikou span line is below the price, it indicates that the market is bearish. Since the chikou span line either goes above or below the price, it is useful for spotting potential trend reversals.

How to use the chikou span line

The chikou span line is also one of the most important and the third component of the Ichimoku Kinko Hyo indicator with its own uses as well. The lagging line is very useful for determining whether the market is bullish or bearish and also signaling entry and exit zones. The market is bullish or in an uptrend when the lagging line or the chikou span line is above the price. The market is bearish or in a down trend when the lagging line or the chikou span line is below the price. On the chart, the chikou span line is above the price which signals that the market is moving in a bullish trend or uptrend direction. Also, the chikou span line below the price signals that the market is moving in a bearish trend or downtrend direction.

Why is it often neglected?

The main reason why the chikou span line is often neglected because it can give false signals. Also, since it still helps signal the direction of the market trend, the combination of the Tenkan Sen and Kijun Sen can be used simultaneously and is very useful in confirming the market trend and whether the market is moving in an uptrend or downtrend direction. This often makes the chikou span line redundant and neglected.

What's the best time frame to use Ichimoku?

In my opinion, like every other technical indicators used in technical analysis, the Ichimoku can be used in any timeframe and for me, there is no set time to use the Ichimoku. However, I consider the hourly timeframes as the best timeframe to use the Ichimoku indicator. The 1hr and 4hr timeframes are great timeframes to use the Ichimoku indicator on the chart.

What is the best indicator to use with it?

When it comes to using technical indicators, it is important not to rely on only one indicator to make trading or investing decisions, it is always a great idea to combine or use two different indicators on the same chart to confirm the signals. For the Ichimoku indicator, the MACD is a great indicator to use with the Ichimoku indicator to confirm the signals from the Ichimoku indicator.

The MACD indicator is helps to determine a new trend and is often considered as a trend-following indicator. The MACD helps determine the trend in the market which is great to confirm the signals from the Ichimoku indicator. Using the MACD indicator, when MACD line crosses above the signal line, then it indicates that the market is in an uptrend. When the MACD line crosses below the signal line, then it indicates that the market is in a downtrend.

The Ichimoku Kinko Hyo indicator and MACD Indicator on the AAVE/USDT chart

Conclusion

The Ichimoku Kinko Hyo indicator is a very good all-in-one indicator and one of the popular technical indicators for new traders. The Ichimoku Kinko Hyo indicator is basically a technical indicator that is mostly used to determine the trend in the market, the momentum along with future areas of support and resistance of any cryptocurrency asset. However, even though, the Ichimoku Kinko Hyo indicator is a very good all-in-one indicator for technical analysis, it is also very important to combine it with another indicator to get better confirmation in the signals. Doing this allows the trader to make better trading decisions in order to make more profit.

@kouba01