Introduction
If you are interested in forex trading, you might have heard of the Ichimoku Fractal Indicator. It is a technical analysis tool that helps traders to identify potential trades based on the market trends. In this article, we will discuss how to use the Ichimoku Fractal Indicator in your trading strategies.
What is the Ichimoku Fractal Indicator?
The Ichimoku Fractal Indicator is a combination of four different indicators – the Tenkan-sen, Kijun-sen, Chikou Span, and Senkou Span lines. These lines create a cloud-like formation, which helps traders to identify the support and resistance levels of an asset.
Tenkan-sen
The Tenkan-sen line is a short-term moving average that measures the average price of an asset over the past nine periods. It is used to identify the short-term trend of an asset.
Kijun-sen
The Kijun-sen line is a long-term moving average that measures the average price of an asset over the past 26 periods. It is used to identify the long-term trend of an asset.
Chikou Span
The Chikou Span line is the current closing price of an asset plotted 26 periods in the past. It is used to confirm the trend of an asset.
Senkou Span
The Senkou Span lines are two lines that form the cloud-like formation. The first Senkou Span line is the average of the Tenkan-sen and Kijun-sen lines plotted 26 periods ahead. The second Senkou Span line is the average of the highest high and lowest low of an asset over the past 52 periods plotted 26 periods ahead. The space between the two lines is called the Kumo, which helps traders to identify the support and resistance levels of an asset.
How to use the Ichimoku Fractal Indicator?
To use the Ichimoku Fractal Indicator, you need to look for the following signals:
1. Price crossing the Kijun-sen line
If the price of an asset crosses the Kijun-sen line from below, it is a bullish signal. If the price crosses the Kijun-sen line from above, it is a bearish signal.
2. Price crossing the Tenkan-sen line
If the price of an asset crosses the Tenkan-sen line from below, it is a bullish signal. If the price crosses the Tenkan-sen line from above, it is a bearish signal.
3. Price crossing the Kumo
If the price of an asset crosses the Kumo from below, it is a bullish signal. If the price crosses the Kumo from above, it is a bearish signal.
4. Chikou Span confirming the trend
If the Chikou Span line is above the price of an asset, it is a bullish signal. If the Chikou Span line is below the price of an asset, it is a bearish signal.
Conclusion
The Ichimoku Fractal Indicator is a powerful tool that can help traders to identify potential trades based on the market trends. By using the signals mentioned above, traders can make informed decisions about their trades. However, it is important to remember that no indicator is 100% accurate, and traders should always use other technical and fundamental analysis tools to confirm their trades.
