Ichimoku (ICH)


The Ichimoku study was developed by Goichi Hosoda pre-World War II as a forecasting model for financial markets. The study is a trend following indicator that identifies mid-points of historical highs and lows at different lengths of time and generates trading signals similar to that of moving averages or MACD. A key difference between Ichimoku and moving averages is Ichimoku charts lines are shifted forward in time creating wider support/resistance areas mitigating the risk of false breakouts.


\[Conversion\;or\;Turning\;Line = \frac{( Highest High_{l-periods} + Lowest Low_{l-periods} )}{2}\;for\;the\;past\;l-periods\]

\[Base\; or\;Standard\;Line = \frac{( Highest High_{m-periods} + Lowest Low_{m-periods} )}{2}\;for\;the\;past\;m-periods\]

\[Leading\;Span\;A = \frac{( Standard Line + Turning Line )}{2} \;plotted\;n-periods\;ahead\;of\;the\;current\;bar\]

\[Leading\;Span\;B = \frac{( Highest High + Lowest Low )}{2} for\;the\;past\;b-periods,\;plotted\;m-periods\;ahead\;of\;current\;bar\]

\[Cloud = Shaded\;Area\;between\;Span\;A\;and\;Span\;B\]

\[Lagging Span = EMA_{x} plotted \frac{x}{2} periods behind\]