...

Ichimoku - chikou span

The Chikou Span is one of the five components of the Ichimoku Kinko Hyo technical indicator. This comprehensive indicator helps traders identify trends, support and resistance levels, as well as entry and exit points. The Chikou Span, or "lagging line", plays a crucial role in confirming trends and trading signals. In this article, we'll explore the Chikou Span in detail. How it is calculated and how it can be used to improve your trading strategies.

Understanding the Chikou Span and its use in trading

What is Chikou Span?

The Chikou Span, also known as the "lag line", is a line representing the current closing price traced back 26 periods. It offers a historical perspective of the current price in relation to past prices, enabling traders to visualize the interactions between the current price and previous prices.

Chikou Span calculation

Calculating the Chikou Span is relatively simple:

Chikou Span=Prix de cloˆture actuel\text{Chikou Span} = \text{Prix de clôture actuel}

This value is then carried back 26 periods on the graph. There are no complex calculations as with other Ichimoku components. The main aim of the Chikou Span is to provide a shifted view of the price for a better interpretation of the trend.

Using Chikou Span

The Chikou Span is mainly used to confirm trends and trading signals. Here's how it can be interpreted:

  1. Confirmation of the Trend :

    • Bullish : If the Chikou Span is above the closing price 26 periods back, this confirms a bullish trend.
    • Kisser : If the Chikou Span is below the closing price 26 periods back, this confirms a downward trend.
  2. Trading signal :

    • Purchase : When the Chikou Span crosses above the closing price 26 periods back, this can be interpreted as a buy signal, especially if confirmed by other Ichimoku components.
    • Sales : When the Chikou Span crosses below the closing price 26 periods back, this can be interpreted as a sell signal.
  3. Support and Resistance:

    • The Chikou Span can also be used to identify historical support and resistance levels. For example, if the Chikou Span encounters prices where there have been significant trend reversals in the past, these levels may act as support or resistance in the future.

Practical example:

Suppose you analyze the EUR/USD chart and the Chikou Span is above the closing prices of the previous 26 periods. This confirms that the current trend is bullish. If other components of the Ichimoku, such as the Tenkan-sen and Kijun-sen, are also showing bullish signals, you could consider taking a long position (buy).

Conclusion

The Chikou Span is a powerful tool in the Ichimoku Kinko Hyo arsenal. By offering a shifted perspective of the current price, it helps traders confirm trends and identify historical support and resistance levels. By understanding how to interpret the Chikou Span, you can improve your trading decisions and spot potential opportunities.

We hope this article has helped you better understand Chikou Span. If you have any questions or would like to share your experiences, don't hesitate to join us on social networks with the hashtag #xenesy and identifying @xenesy_project. Happy trading!

Did you like our article? Share it with your community!
Facebook
Twitter
LinkedIn
Telegram
WhatsApp
Email
en_US