Crypto Academy / Season 3 / Week 1 - Homework Post for [@kouba01]―Trading Crypto With Ichimoku-kinko-hyo Indicator - Part 1

Thanks to professor @kouba01 for this wonderful lesson about "Trading Crypto With Ichimoku-kinko-hyo Indicator - Part 1". Ichimoku indicator was new to me. But after your lesson and online research I learned this indicator. Now I am able to read this indicator and generate buying and selling signals. I loved this lesson very much. Now, I am ready to complete my homework task. Let's get started:

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1- What is the Ichimoku Kinko Hyo indicator? What are the different lines that make it up? (screenshots required)

Ichimoku Kinko Hyo indicator

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Ichimoku Kinko Hyo indicator was first discovered in 1960 by Goichi Hosoda who was a Japanese journalist. Goichi Hosoda spent 30 years of his life developing this indicator. Now traders often use this indicator. This indicator is using now to predict the future price and determine the support and resistance area.

Ichimoku Kinko Hyo is the Japanese language if we translate this to English one glance equilibrium chart or instant look at the balance chart. It works as it means we can tell the market condition just at a glance look at this indicator.

The Tenkan- Sen Line

The Tenkan- Sen Line is also known as the Conversion Line. This line is the midpoint of the highest high and lowest low of the last 9 periods. The calculation will be (9 periods high + 9 periods low)/2. This line is the fastest moving line in Ichimoku Kinko Hyo indicator.

The Kijun- Sen Line

The Kijun- Sen Line is also known as the Base line. This line is the midpoint of the highest high and lowest low of the last 26 periods. The calculation will be (26 periods high + 26 periods low)/2. This line is used in conjunction with Tenkan-Sen Line to generate signals where to buy and sell. In this case, the cross point is important, the cross point will be either a buy or sell signal.

The Senkou Span A

The Senkou Span A in English it is Leading Span A. This line is used to measure momentum. The Senkou Span A forms a cloud with Senkou Span B which is known as Kumo

Calculation of The Senkou Span A=(Conversion line+base line)/2
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The Senkou Span B

The Senkou Span B is also known as Leading Span B. This is the slowest moving line because this line is calculated using the last 52 periods of data.

Calculation of The Senkou Span B= (52 periods high + 52 periods low)/2

The Chikou Span

The Chikou Span is also known as Lagging span. This line is created by plotting closing prices of last 26 periods. Tenkan Sen and Kiijun Sen generates signals and Chikou Span confirms those signals. The best way to use Chikou Span is with othe elements of the indicator.

Calculation of The Chikou Span= (Last close price plotted 26-Periods in past)

In this screenchot I have shown Tenkan Sen, Kijun Sen, SenKou Span A, Senkou Span B, Chikou Span and Kumo.

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2- How to add the Ichimoku indicator to the chart? What are its default settings? And should it be changed or not?(screenshots required)

Adding the Ichimoku indicator to the chart

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• First, click this fx indicators a pop up window will open. Search for Ichimoku you will get Ichimoku Cloud, click there.

• Ichimoku indicator is added to our BTC/UDST chart. Here you can see 5 different lines of the indicator.

You have two settings options available you may edit. 1. Inputs settings & 2. Style Settings.

1. Inputs settings

By default here (9-26-52) settings will show. Goichi Hosada used the setting after a lot of research. The interesting thing is that even today these settings are considered to be excellent.

However, for the convenience of trading, you can edit it and make it your own. But it will require a lot of ideas about it.

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2. Style Settings

You can color the lines as you wish from the style settings. If you do not want to see a line, it can be closed.

Line name	Color name
Tenkan Sen	Blue color
Kijun Sen	Claret red color
Chikou Span	Light green color
Senkou Span A	Dark green color
Senkou Span B	Light red color.

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3- How to use the Tenkan Sen line? How to use the Kijun Sen line? And How to use them simultaneously?(screenshots required)

Use of The Tenkan Sen line

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Tenkan Sen line is calculated by the mid point of past 9 periods. This line is for short period of time, the line represents strong support. That means if the line move upwards the market is in bullish condition but if the line move downwards the market is in bearish condition.

The uptrend and downtrend are shown in the graph above based on the Tenkan Sen line. We can see that the market is uptrend when the Tenkan Sen line is up and the downtrend is down when it is down.

Use of The Kijun Sen line

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As you can see from the screenshot above, when the market price is above the Kijun sen line, the market is on the uptrend. But if the market price is below the Kijun sen line, then the market will continue to downtrend.

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Simultaneous use of Tenkan sen & Kijun Sen line

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It is easy and more effective to use Tenkan sen & Kijun Sen lines simultaneously. When these two lines cross each other there will be a signal either buying or selling. When the Tenkan sen line is above the Kijun sen line and crosses each other this will be a buying signal because the market is in uptrend condition. I marked green circles the buying signals from BTC/USDT chart below.

There are also selling signals, when the Tenkan sen line is below the Kijun sen line the market is in downtrend condition. There will be selling signal in the certain cross. I market the selling signal with red circle in above chart of BTC/USDT pair.

I hope now you understand how to use simultaneously Tenkan sen & Kijun Sen line.

4- What is the chikou span line? And how to use it? And Why is it often neglected? (screenshots required)

The Chikou Span line is created by plotting closing prices of last 26 periods. Tenkan Sen and Kiijun Sen generates signals and Chikou Span confirms those signals. When Chikou Span is above market movement we can say the market is in bull season.

When the Chikou Span is below the market movement it assumed that we are is a bearish season.

Chikou Span is unnecessary if you look at a glance. Traders often neglated this line because sometime it provides false signals. But Chikou span is used to confirm signals, if we proper use of it the trading will be amazing. The best use of Chikou span line conjunction with other elements of the indicator. Then good results will come.

5- What's the best time frame to use Ichimoku? And what is the best indicator to use with it? (screenshots required)

The time frame of trading depends on the trader. Some prefer short term and some prefer long term trading. The Ichimoku indicator can be used in both cases. Short term trading is generally 1 hour, 45 minutes, 30 minutes and even 15 minutes. However, if you use the Ichimoku indicator in the short term, there is a possibility of a slight defect in the signal. But it is best to use the Ichimoku indicator for long term trading. If you use the long term trading signal Ichimoku indicator, it is possible to get an absolutely good signal.

Ichimoku indicator with RSI indicator can be best used. I tried to show it in BTC / USDT pair below.

We know that overselling signal can be seen with RSI indicator. After overselling, the market recovers but it takes time. Here BTC drops the price. After some time, the Tenkan sen and Kijun sen line meet and give a buying signal, then the market continues to uptrend.

In this way, Ichimoku indicator can be best used with RSI indicator.

Conclusion

The Ichimoku indicator may seem very difficult to understand at first. But if you practice it, you can master it well. The state of the market can be easily understood by showing one here. This is one of the most used indicators. However, if you want to avoid risk in trading, it can be used with the RSI indicator.

Ichimoku indicator can be used in any timeframe. It has 5 lines. Today's lesson was a lot of work to understand each line separately. I have learned many new geniuses by researching online along with the lesson.

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Thanks for patiently reading my post. I hope you enjoy it.

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Best Regards,
@masumrbd