Ichimoku Charts - An Introduction to Ichimoku Kinko Clouds

By Grace Cheng on June 10, 2007 | More Posts By Grace Cheng | Author's Website

Author: Nicole Elliott
For those who closely follow newsfeeds, you may already be familiar with the author as she is frequently quoted on her views of technical levels in forex. Ichimoku charts are also referred to as Cloud Charts, which is another way of interpreting candlestick charts. This book is one of the first English books to touch on this technical tool.

The Ichimoku Kinko Hyo (full name of these charts) was developed by Goichi Hosoda, a Japanese journalist, writing under the pseudonym ‘Ichimoku Sanjin’. He developed this charting technique just before World War II in 1940s, and shared it with the public when he published his book in 1968. The Ichimoku method got popularized after the publication of ‘Ichimoku Kinko Studies’ in 1996 by Hidenobu Sasaki.

Nicole wrote this in her book “….walk into any Japanese dealing room today and the most common charts you’ll see will be Ichimoku Kinko Clouds”. If so many Japanese traders use Ichimoku, then it is definitely useful to keep an eye on it.

This book explains in detail how you can construct Cloud Charts and how to interpret them. What I like about the book is that there are many colour illustrations throughout the book (you really need colour to differentiate the clouds and different moving averages). She shows examples of how Ichimoku can be used with spot forex, forex options, commodities, stock indices and interest rate futures. Three key time periods (9, 26, 52) are used to calculate the five individual plots used in the indicator.

Knowing more about this tool will give you a larger perspective of what is going through the minds of Japanese traders, especially if you trade USD/JPY in the Asian session.

This book is written in a very easy-to-understand manner. I enjoyed reading about Nicole’s approach to technical analysis (found in the Appendices), in addition to the case studies that she has included. If you wish to learn more about Ichimoku, this is certainly the book you should get.

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