Guide to Ichimoku Analysis in Forex Trading

First of all, the Japanese word "Ichimoku" means "one glance", "Kinko" means "balance / equilibrium and "Hyo" means "chart", in short Ichimoku Kinko means to see the equilibrium at a glance. Basically, the indicator is best used to define market trend, support and resistance and finally generate buy/sell signals.

Ichimoku Kinko Hyo consists of 5 lines and a "Kumo" or known as "cloud" as most people call it, they are:

1. Tenkan-Sen (Conversion Line) -- (Highest High + Lowest Low)/2, for the past x periods (Traditionally x=9)
2. Kijun-Sen (Base Line) -- (Highest High + Lowest Low)/2, for the past y periods (Traditionally y= 26)
3. Chikou Span (Lagging Span) -- Today's closing price plotted y periods behind
4. Senkou Span A -- (Tenkan-Sen + Kijun-Sen) / 2, plotted y periods ahead
5. Senkou Span B -- (Highest High + Lowest Low) / 2, for the past z periods, plotted y periods ahead (z = 52)

The space between the Senkou Span A and Senkou Span B is known as the Kumo or the cloud.