Ichimoku Kinkō Hyō, otherwise known as Ichimoku, is a trend indicator that seeks to identify a trend direction and identify buy/sell signals. It uses combinations of the average of a varying-duration time periods’ high and low prices to predict price changes.
Example parameter values
Time resolution: 1 hour
Short period (N1): 9
Middle-length period (N2): 26
Long period (N3): 52
- Time Resolution: The time resolution the indicator will use to analyze the market. For example, if this is chosen as 1 hour, and the N1 length is 9, then the indicator will use the high and low in the past 9 hours to compute the Conversion Line. If it is instead chosen as 1 minute, then the indicator use the high and low in the past 9 minutes.
- Short period (N1): used to compute the Conversion Line.
- Middle-length period (N2): used to compute the Base Line, as well as the offset of Leading Span A and Leading Span B.
- Long period (N3): used to compute the Leading Span B.
- Threshold: The “Threshold” parameter allows the user to gauge the strength of the trend. If Threshold is set to 0 then when the Leading Span A is above the Leading Span B, that is a buy signal, and vice versa. However, if this parameter is set to 0.2, then a buy signal will be generated only when the Leading Span A is 0.2 above the Leading Span B, and a sell signal will be generated when the Leading Span A is 0.2 below the Leading Span B. Increasing this parameter can affect the strength of the trend that indicates a buy/sell signal.