Ichimoku Kinko Hyo
What Is Ichimoku Kinko Hyo?
Ichimoku Kinko Hyo (一目均衡表), which means “One Glance Equilibrium spreadsheet,” is more than just a technical tool. It is a window into market balance and timing, rooted in Japanese thinking. Created by journalist Goichi Hosoda in the 20th century, Ichimoku blends structure, simplicity, and intuition into one visual system. With a single look “ichimoku” (一目) a trader can assess trend, momentum, and support/resistance based on the equilibrium among markets.
A Japanese Origin Story
Goichi Hosoda, known by his pen name Ichimoku Sanjin (一目山人), wasn’t just an analyst but was a philosopher of the markets. He believed that timing and balance were more powerful than prediction. Ichimoku was developed in the late 1930s by Japanese journalist Goichi Hosoda. After decades of testing and refinement, he released it publicly in the 1960s. Hosoda’s goal was to create a tool that could balance trend, momentum, and support/resistance in a way that was easy to interpret. Today, Ichimoku is used worldwide, bridging Eastern and Western trading strategies.
His method reflects traditional Japanese principles of harmony (和 Wa), patience, and rhythm. Rather than react to every move, Ichimoku encourages you to wait for equilibrium, a moment when the market reveals its intentions.
Goichi Hosoda’s Wisdom and Proverbs
Hosoda infused his system with timeless wisdom. Some of his teachings include:
“The market is a business of patience.”
Ichimoku isn’t about chasing every move; it’s about waiting for the right setup with discipline.“You must observe the flow of spirit in the market.”
This reflects how Ichimoku captures momentum and sentiment, not just price levels.“Time creates price.”
A core belief behind the Time Theory, where the rhythm of the market determines the next movement.
These philosophies elevate Ichimoku beyond a chart. It becomes a form of market mindfulness, where the trader aligns with the rhythm rather than forcing outcomes.
The Five Lines of Ichimoku
The system uses five lines to paint a dynamic picture of price action:
Tenkan sen (Conversion Line): A short-term indicator of market direction.
Kijun sen (Base Line): A mid-term trend filter and support/resistance guide.
Senkou Span A & B (Leading Spans): These form the Kumo (Cloud), projecting support/resistance into the future.
Chikou Span (Lagging Line): A backward-shifted price line that helps confirm trends.
Together, these lines reveal momentum, trend direction, and potential reversals with clarity.
The Three Pillars of Ichimoku Theory
Ichimoku is built on three core theories:
Wave Theory: Emphasizes the wave patterns of price movement.
Time Theory: Looks at market cycle patterns whether they are repeating, contracting, or expanding.
Price Observation Theory: Suggests the price targets based on wave theory.
These theories guide the interpretation of Ichimoku beyond the lines, offering a framework for understanding market behavior holistically.
Ichimoku Trading Strategies
Once you understand the five lines of Ichimoku and how they work together, you can start applying simple strategies. These methods are based on identifying trend direction, momentum, and potential reversal points all at a glance.
1. Kumo Breakout (Sanyaku Kouten / Gyakuten)
This strategy involves watching the price action in relation to the Ichimoku Kumo (Cloud).
Bullish Signal: When the price breaks above the cloud, it may indicate the start of an uptrend.
Bearish Signal: When the price drops below the cloud, it could suggest a downtrend is beginning.
You need to wait for confirmation from other lines (like Tenkan-sen crossing Kijun-sen, Chiko span breakout) before Kumo breakout to make decisions.
2. Tenkan-Kijun Cross
This is one of the most widely used entry signals.
Bullish Cross: When the Tenkan sen crosses above the Kijun sen, it’s considered bullish in short to mid term.
Bearish Cross: When the Tenkan sen crosses below the Kijun sen, it’s considered bearish in short to mid term.
The strength of the signal depends on where the crossover happens, above, inside, or below the Kumo.
3. Chikou Span Confirmation
The Chikou Span offers a way to confirm the market momentum.
- If it’s above the price, it supports bullish momentum.
- If it’s below the price, it confirms bearish momentum.
Traders often use this as a filter, only taking trades when the Chikou Span aligns with the direction of the breakout or crossover.
4. Kijun sen Bounce
Kijun-sen acts as a dynamic support/resistance line.
When price pulls back to the Kijun and bounces, it can offer a low risk entry in the direction of the trend.
This strategy works best in strong trending markets where price respects the Kijun sen.
