Ichimoku Beginner Basics & Terms
By @HackermanAce
Hello everyone! Its Ace, I wanted to do a written blog with all my studies , research and analysis in a written form on top of my twitch streams. So to start, here are the Ichimoku keywords you can reference if you are new to the Ichimoku System the way I use it on my streams with a couple other terms. Also I’m going to assume you have the basic’s of price action reading and candles down, if not we can discuss that on another thread or you can check out Cred’s thread.
Lets start with just the basic keywords with some examples you will see when you apply the Ichimoku Indicator and then we can get into further descriptions.
Tenkan-Sen: Typically when turned on default, its the BLUE line- I use this as a soft/light support or resistance line. “ex: a”
Kijun-Sen: Typically when turned on default, its the RED line- I use this as a hard/heavy support or resistance line. “ex: a”
TK Cross: When the Tenkan and Kijun cross above or below one another. This is typically used to identify potential trend changes in conjunction with other factors. “ex: b”
Lagging Span: Typically when turned on, its the green thinner line behind the current price “ex: b”
Red Cloud: A bearish cloud, typically indicated in red or with the price below it. “ex: c”
Green Cloud: A bullish cloud, typically indicated in green or with the price above it. “ex: c”
Kumo Twist: The point where the clouds thins up and begins changing colors giving you way to judge a shift in momentum on the price. “ex: c”
S/R: You will hear me mention this, this simply means “Support / Resistance”. Both the Tenkan and Kijun act as their own type of S/R.
FTA: This just stands for “Frist Trouble Area” typically a cloud break thru point or a “Kumo” twist spot.
E2E: This is just short for “End to End” which means when the price enters a cloud from either direction and is going to head for the opposite side of the cloud. “ex: d”
To go into further detail of each keyword, lets go ahead give the technical info and examples based off the reference image below.
Tenkan: on a technical sense its a Conversion Line: over a 9-period high + 9-period low/2. I use this as a softer/less macro S/R line so it hold less weight vs the Kijun when I am trading. EX: When price climbs up the Tenkan and is about to close below it, ill assume this is a soft support about to break and head to the Kijun .
Kijun: On a technical sense its a Base Line: 26-period high + 26-period low/2 I use this as a hard/strong macro S/R so it ends up being the target point or the macro point I bet on regardless of direction . EX: If price has been trending on the Tenkan either above or below it when the price direction is clear, I aim for the Kijun as a major S/R target that needs to either hold or push thru.
TK Cross: This happens when you have either the “Tenkan” or “Kijun” cross over one another, I define it based off where the Tenkan crosses. In the example below you’ll see the Blue Tenkan line preform 3 TK crosses, 2 bullish and one bearish . Can you see it? If not , here is how you can identify a bullish one vs a bearish one.
Bullish- In this case it would be when the Tenkan cuts over the Kijun from below, in the example you can see this happen twice.
Bearish- In this case it would be when the Tenkan cuts thru the Kijun from above, as you can see in the example below this happens one time.
*There are instances when you might get a fake TK cross which ill discuss later on*
I want add this before we continue further, the Ichimoku Indicator can be used on any timeframe you want to use it on, you just have to adjust the way you assume price is going to move. Ex: if you are trading scalps on the 15min or less, you wouldn’t hold it the same way you would with a 4h swing.
Lagging Span- The official name is the “Chikou Span”. On a technical sense its basically the Close plotted 26 days in the past which can be adjusted if need be. It isn’t used alone typically but is used to show the general momentum of the asset. Also keep in mind this is a lagging indicator as defined .You’ll find this behind the current price.
Clouds - As you can see above there are 2 types of clouds, a Green Cloud and a Red Cloud, of which they are technically formed by 2 spans, a Leading Span A = Conversion Line + Base Line/2 and the Leading Span B: 52-period high + 52-period low/2. The space between these 2 forms the clouds. The location of the clouds vs price tend to acts as S/R , so if clouds are below they end up being support, above they end up being resistance .
Leading Span A is considered a “Leading” indicator vs lagging because the values are plotted in future giving potential future S/R points .
Leading Span B since the calculations are over a longer period this is formed slower vs Span A which reacts quicker to price changes due to the fewer calculations.
Kumo Twist -This happens when the clouds begin to thin out and are ready to change colors or continue the existing color. In a technical sense, its when the two leading spans cross , resulting in 2 scenarios :
Bearish = is when the clouds changes from green to red. (left)
Bullish = is when the clouds changes from red to green. (right)
*There are instances when you might get a fake Kumo twist or a weak Kumo Twist which ill discuss later on*
Bullish Bearish
FTA - Short for “First Trouble Area” I use it to define weak points in the clouds that we have a potential of breaking thru or point where the volatility will be affected. To examples of these points is the “Kumo Twist” point seen above and a weak point in a trending cloud as seen bellow.
That should cover the very basics of Ichimoku with some terms you will hear me use frequently on my streams or tweets. In the next few articles we will be discussing strategies, each of these applied to various trading methods with plenty more detail and real examples. I also have a medium page where ill be posting another article which is much longer for those interested.
I appreciate any Likes and RT on twitter , that’s all I ask, thank you! Feel free to comment suggestions for the next article.
Nice Job Ace! Iv'e been wanting to do a Pitchfork teach in for a while