Experiences in forex trading, by a special way.

November 14, 2022

Ichimoku Kinko Hyo in forex trading

Ichimoku kinko hyo is a very special technical indicator that, if used properly, can be highly effective in forex trading.

First, we need to agree on technical indicators, most of them have lag, so if we use it theoretically, most of the results will fail. It is necessary for every trader to follow the technical analysis method, if using technical indicators, it is necessary to experience and draw up a trading method with separate ways, it contains both economic factors. experience in it, both the psychology of trading, the trading style and the unique personality of each person, and it will certainly be difficult for anyone to be the same.

For me personally, all the different paths eventually converge to a single truth, which means that you use technical indicators,

I don't, others use fundamental analysis, others use them. others use news-based methods, others use psychological analysis.... all will lead to a single destination, and when a trader is proficient in using a technical indicator, if there is an insertion whether it is on the chart or not is not so important anymore, because they already know about it, use it or not, they also visualize it and have a "feeling" about it. Therefore, I temporarily conclude that the means and tools to walk on the way are not too important, as long as it is satisfactory to reach the destination.

Now starting the main content, talking about the theory and structure of Ichimoku Kinko Hyo, I will not mention anymore, because everyone already knows, you can take a quick look at this image to clearly see the components of Ichimoku Kinko Hyo:

And here are the things I'm using Ichimoku as an advantage:

- Chikou Span Line: To me, it is just a lagging line of price, its function is as simple as a line chart, so at a glance, it will be easy to identify resistance or support areas, it will remove the noise of the price created by the candlestick shadows. If anyone likes to use it, leave it as default, and personally, when I use ichimoku, I usually hide this path and do not use it.

- Red Tenkan-Sen line: Everyone knows it's just a 9-session moving average, if inserted, small price fluctuations can be detected early (when interacting with this line at support/resistance areas, or create distance and slope when following the trend), I personally don't use this line because I am used to it at all (hide it).

- Kijun-Sen line: This is considered the soul in the ichimoku kinko hyo technical indicator, I highly appreciate this Kijun line. Although the kijun line is similar to the Tenkan, it functions as a 26-day moving average, but it reflects the overall situation better than the Tenkan (Tenkan only reflects the short-term), and most importantly, it has a flat . With 1 line FLAT KIJUN will tell us a lot of meaningful things (I will explain below through an example).

When the kijun becomes flat, it is creating a pull on the price line, causing a price pressure that may return to that flat area. While the inherent feature of the Kijun is as the "pivot" of the price, that is, the price will always move around the Kijun line (since it is a 26-day moving average). So when you combine these two things, in the context of an abnormal price zone, at a specific trend, what do you think will happen???

For example, the trend is down, and the price corrects up too much, it is above the kijun line (unusual), plus the kijun when it is flat (flat), then the price turns down to at least the flat area. That's a huge possibility, isn't it? For example, in the EUR/USD forex currency pair chart below, the arrow points are all such positions:

To interpret this theoretically is not difficult to understand, in a downtrend the downward price pressure is higher than the upward price pressure. And Kijun is the average price of the last 26 trading sessions, so the current price is higher than the average price of the last 26 sessions, it is an anomaly (unbalance) while the downtrend is still present. then obviously this is an opportunity to SELL and the probability of winning is higher.

When using Kijun with the Flat feature, if combined with the Flat Kumo (flat cloud) will improve the trading efficiency much more, especially the two flat areas of these two components overlap, try to notice that. .

I also consider the Kijun line as a "wall to prevent trend reversal". It is easy to see that in a downtrend, for example, the first part of the price trend will usually correct above the kijun line (the trend is still weak), then the downtrend becomes stronger, the price will increase each time. When the trend is weak, the price rises above the kijun line and falls again, but if there is a reversal, the price can only fall back around the kijun line. then it goes up and ends a downtrend (As in the last arrow in the image above, the price retraces to the flat kijun and bounces up to mark the end of the downtrend). You can imagine the kijun (as well as the kumo cloud) it gets hit a lot then it weakens (trend weakens) and just like that it will break (end of trend)...

Of course, in a sideways trend, the flat Kijun also plays a similar role, it will be the pivot for the price to move around, when the price goes up, it will create a downward attraction and vice versa, the moving area can be considered. The movement of the kijun as a dynamic equilibrium, true to the role of the moving average, is its inherent nature.

In addition, Kijun also makes it easy to see the 50% fibonacci retracement score very accurately, please check it, this is a very nice feature.

- Kumo clouds: With kumo clouds, there are many things to explore, because it has many forms, sometimes it is thick, sometimes it is thin, sometimes it is steep, sometimes it is gentle, sometimes it expands, sometimes it form 2 symmetrical colors... So if you use it for a long time, you will mold it into certain "shapes" with high efficiency. In the scope of this article, I will only state its role in combining with Kijun in the Flat feature, and its role in determining the trend as well as the strength and weakness of the trend when analyzing. price chart analysis.

The first is the Flat feature, as mentioned above, when Flat Kumo will also create a suction like Flat Kijun. However, you need to be very careful that this attraction is a ADJUSTABLE POWER, not a continuing force. The correcting force usually increases if overbought or oversold occurs, that is, the market sentiment is too excited and the transaction exceeds the equilibrium price range (see more in the article: https://www.caphile.com/2022/11/equilibrium-zone-in-technical-analysis.html) whether the force is in the direction of the trend or against the trend, it is also a corrective force ON EQUALITY ROUND, and after the price returns to the zone balance whether it will continue the trend or will reverse is another story. Therefore, combining this factor with the support from the general trend will bring higher trading efficiency (the direction of the correction is in the same direction as the general trend).

One more note for both the Kumo and the kijun, that it should always be combined with other important factors in technical analysis, which is a combination of MULTI-TIME FRAME ANALYSIS, looking at the VALUE signal, and use the TIMING element in transactions (covered in other articles on this blog).

Now is a trend element through the expression of Kumo, just like Kijun, Kumo is like a "wall to prevent trend reversal", but kumo clouds have a much clearer and easier to observe expression than Kijun .

There are 2 things to keep in mind when observing kumo clouds to identify trends, which are:

1. The position of the price relative to the kumo cloud shows the current trend: If the price is above the cloud and the cloud goes up, it is clearly an uptrend, and vice versa is a downtrend. If the price has not had any contact with the cloud, the trend is still strong. If the price continuously approaches the cloud, the trend has begun to weaken. And after price touches many times and "crosses many times", the trend is already very weak, a reversal is possible IF BIGGER TIME FRAME CONFIRMED THAT, meaning a reversal is possible here. direction or there may be a break in the direction of the continuation of the old trend, to identify and predict what will happen can only be based on multi-timeframe analysis.

2. Multi-timeframe analysis: Rule #1 would no longer be accurate without using multi-timeframe analysis (especially considering larger timeframes). Always remember this.

Here are a few examples:

The USD/JPY currency pair looks like a picture for a SELL signal, because at the H4 frame, the downtrend is present, we sell at the red arrow:

At the H4 frame the price is still below the cloud, the price is right at the resistance area, and at the H1 time frame there is a Flat Kijun signal while the price rises above both the kumo cloud and above the Kijun, it is an imbalance, then the kumo also happens to be flat and coincides with the flat kijun area, so the decision to sell is reasonable, and the short target take profit zone is around the flat kijun, the long target depends on the actual situation.

Or like the following example:

At H1 The EUR/USD downtrend ends only after the price "crosses many times" (moving sideways creates many peaks and troughs, and then there is repeated exposure to kumo clouds)

The reversal of H1 is confirmed by the larger time frame, because at D1 the uptrend is present and the price is at the end of the correction:

Above is a sharing on how to use the ichimoku kinko hyo technical indicator in forex trading. Hopefully the article will bring new things to readers. Please share if you find it useful, and see you in the next article.

Best regards,


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