What is Ichimoku Charts and How to Use it to Trade Like a Pro

Ichimoku charts, also known as Ichimoku Kinko Hyo, are a type of technical analysis chart used to identify and analyze trends in financial markets. The chart was developed by Japanese journalist Goichi Hosoda in the late 1930s, and it is still widely used by traders and analysts today.

Ichimoku charts consist of five lines that are plotted on top of the candlestick chart of an asset. The lines are calculated using various moving averages and are designed to provide a comprehensive view of the market trend, momentum, support and resistance levels, and potential price targets.

The five lines are:

• 1. Tenkan-sen: a short-term moving average
• 2. Kijun-sen: a medium-term moving average
• 3. Senkou Span A: the average of the Tenkan-sen and Kijun-sen, plotted 26 periods ahead
• 4. Senkou Span B: the average of the highest high and lowest low over the past 52 periods, plotted 26 periods ahead
• 5. Chikou Span: the current closing price, plotted 26 periods back

Traders use Ichimoku charts to identify trends, momentum, and potential trading opportunities. For example, if the price is above the cloud (the area between Senkou Span A and B), it is considered bullish, while a price below the cloud is bearish. Traders also look for crossovers of the Tenkan-sen and Kijun-sen lines, as well as divergences between the Chikou Span and the price, as potential signals for buying or selling an asset.