As I mentioned in my first post about Ichimoku, there are 5 lines. These 5 lines will appear in whatever chart you choose. It could be the 15-min chart, the 1-hour chart (1H) or the daily chart (D). Not only lines, but also clouds.
In this post, I will explain how I came to understand what the names of the lines are. So keep in mind that I am no expert. After watching videos, reading about the lines and talking to my IML leader’s wife, Chariselle Sambo, I think now I can keep the lines apart and tell which is which.
In the explanation, I will use the term period. What I mean with a period is a day if you are on a daily chart, a minute if you are on the 1-minute chart (1M), and so on.
I have put the lines in 3 groups.
❶ Chickou Span
The first group consists of only one line. This line is called the Chickou Span or the Lagging Span. You can recognize this line easily because this one is lagging behind the current price.
The Chikou Span gives the current price but 26 periods back.
Let’s take a look at the Daily Chart of USDCAD. Do you see the Chickou Span? The line is lagging behind the current price, but where it ends, is at the same price as the current price. (See horizontal green line). Between the end of the Chickou Span and the last candle forming, there are 26 candles. In this case, it means 26 days.
❷ Tenkan-Sen & Kijun-Sen
The second group consists of the two lines that are on the same level as the price. They are called the Tenkan-Sen or Conversion line and the Kijun-Sen Span or Base Line.
But which is which. In every YouTube video or in every document you read they have different colors. And the one explaining is always referring to the color trying to explain which is the Kijun-Sen Span. Only one video gave me finally a clue as to how to separate the two lines.
The Kijun-Sen Span is calculated by summing up the highest high and the lowest low of the last 26 periods (bars) and is then divided by 2.
This makes the line to be horizontal from time to time. The other is almost never horizontal. The other line is theTenkan-Sen Span or conversion line.
The Tenkan-Sen Span is calculated by summing up the highest high and the lowest low of the last 9 periods and then divided by 2.
Both lines are an average. But the Tenkan-Sen is about a smaller interval so the chances are greater that it varies. See next picture for both lines.
❸ Senkou Span A + B and the cloud
The third group consists of the two lines that are ahead of the current price. The lines are called the Senkou Span A (leading span A) and the Senkou Span B (leading span B). They are also the lines that form the Ichimoku cloud. The Ichimoku cloud is also called Kumo.
So Kumo is the area between Senkou Span A and Senkou Span B.
The Senkou Span A = Leading Span A is calculated by taking the midpoint of the Tenkan-Sen (Conversion line) and the Kijun-Sen (Base line). However, this value is plotted 26 periods into the future.
On the other hand the Senkou Span B = Leading Span B is calculated by summing up the highest high and the lowest low of the past 52 periods and then divided by 2. This value is also plotted 26 periods into the future.
If you understood some explanation of the Tenkan and the Kijun you would know now which line will show more horizontal parts. That would be the Senkou Span B because it is an average over a longer period.
Take a look at the next picture.
Very important: each Ichimoku line acts as a support/resistance line.
Finally, I get it. I can name the Ichimoku lines and I can recognize them in a chart. I am happy. I am on the right track. I hope you understand it too. In my first post about Ichimoku, I wrote mainly about what it is. In this one, I figured out how the lines are named and how the clouds (Kumo) are formed. Now I am intrigued by the purpose of the cloud, the Kumo.
There are some traders on IML TV that use the Ichimoku. But to follow them it is better to get an understanding of the indicator.