In addition, the relative angle of the kijun sen will indicate the strength or momentum of the trend. Thus, short-term trend can be measured by the direction of the kijun sen. Once price exceeds either the last highest high or lowest low within the last 26 periods, however, the kijun sen will reflect that by either angling up or down, respectively. If price has been ranging, then the kijun sen will reflect the vertical midpoint of that range (price equilibrium) via its flat aspect. The tenkan sen thus provides us with all the information the tenkan sen does, just on a longer time frame.ĭue to the longer time period it measures, the kijun sen is a more reliable indicator of short-term price sentiment, strength and equilibrium than the tenkan sen. Like its brother, the tenkan sen, the kijun sen measures the average of price's highest high and lowest low, though it does so over a longer time frame of 26 periods as opposed to the tenkan sen's 9 periods. The kijun sen is one of the true "workhorses" of Ichimoku Kinko Hyo and it has myriad applications. The kijun sen is calculated in the following manner: KIJUN SEN ("standard line") (HIGHEST HIGH + LOWEST LOW)/2 for the past 26 periods The crossover of these two lines is actually a trading signal on its own, at topic that is covered in more detail in Ichimoku Trading Strategies section. Likewise, if the tenkan sen is below the kijun sen, then that is bearish. If the tenkan sen is above the kijun sen, then that is a bullish signal. One of the primary uses of the tenkan sen is vis-a-vis its relation to the kijun sen. Nevertheless, price breaching the tenkan sen can give an early indication of a trend change, though, like all Ichimoku signals, this should be confirmed by the other Ichimoku components before making any trading decision. Thus, given the very short term nature of the tenkan sen, it is not as reliable an indicator of trend as many other components of Ichimoku. Of the two, the tenkan sen is the "fastest" given that it measures trend over the past 9 periods as opposed to the kijun sen's 26 periods. The tenkan sen and the kijun sen both measure the shorter-term trend. A steeply angled tenkan sen will indicate a nearly vertical price rise over a short period of time or strong momentum, whereas a flatter tenkan sen will indicate lower momentum or no momentum over that same time period. The angle of the tenkan sen can also give us an idea of the relative momentum of price movements over the last 9 periods. On a bearish chart, the tenkan sen will likewise act as a level of resistance. This is due to the more conservative manner in which the tenkan sen is calculated, which makes it less reactive to small movements in price. With only one exception, price action stayed above the tenkan sen in the three highlighted areas of the chart, while price broke below the SMA numerous times. It can also be seen how the tenkan sen provides a much more accurate level of price support than does the 9 period SMA. When the tenkan sen is flat, it essentially indicates a trendless condition over the last 9 periods. Thus, during periods of price ranging, the tenkan sen will clearly show the midpoint of the range via its flat aspect. This is due to the fact that the tenkan sen uses the average of the highest high and lowest low rather than an average of the closing price. Consider the chart in Figure I below:Īs can be seen in the chart, the tenkan sen often exhibits "flattening" whereas the 9 period SMA does not. This study of the tenkan sen will provide us with our first foray into the key aspect of equilibrium that is so prevalent in the Ichimoku Kinko Hyo charting system. Hosoda believed that using the average of price extremes over a given period of time was a better measure of equilibrium than merely using an average of the closing price. While many may compare the tenkan sen to a simple 9 period simple moving average (SMA), it is quite different in the sense that it measures the average of price's highest high and lowest low for the last 9 periods. The tenkan sen, as we have already mentioned in our Introduction section, is calculated in the following manner: TENKAN SEN ("turning line") (HIGHEST HIGH + LOWEST LOW)/2 for the past 9 periods Thus, for the purposes of describing Ichimoku Kinko Hyo within this wiki, it will be assumed that the standard settings are being used. The argument could be made that, since Ichimoku Kinko Hyo functions as a finely-tuned, integrated whole, changing the settings to something other than the standard could throw the system out of balance and introduce invalid signals.
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