THE CHIKOU SPAN LINE AND ITS IMPACT ON THE ICHIMOKU-KINKO-HYO INDICATOR

Greetings dear readers of this prestigious platform, continuing with the series of writings associated with the ICHIMOKU-KINKO-HYO indicator, in this installment we will be addressing the one concerning the use of the CHIKOU SPAN line, as a mechanism to detect buying and selling zones in a crypto asset and generate profitability when making trading investments.

In this sense, it is necessary to remember that the CHIKOU SPAN line is presented as a lagging line in the indicator, which takes the current price as a reference and projects it 26 periods into the past, so that the behavior of the price can be evaluated as a function of time.

In this sense, the line is able to detect selling pressure within the market, which is why it is decisive when speculating in bear markets. Therefore, we can determine that when the lagging line CHIKOU SPAN in the past, is below the line of the current candle, a greater selling pressure is expected in current conditions, otherwise, if the line is above the pressure of greater dominance will be the buying one.

Similarly these aspects can be determined in the following chart, making it clear that this type of analysis are speculations that are made on an asset, where no indicator represents an absolute truth, so we must handle with caution when entering into operations in buying or selling on an asset.

Another aspect of interest associated with the ICHIMOKU-KINKO-HYO indicator and the CHIKOU SPAN line is the highlighted dependence on price, which generates well-defined peaks associated with the ups and downs in the price of an asset, which generates patterns associated with support and resistance zones used by traders in their market speculation system.

Although the line in question is beneficial it is often forgotten by many traders who use the indicator, product of the broad that is the ICHIMOKU-KINKO-HYO indicator with its five lines that compose them, so that the ideal is to use the system as a trading strategy and not separately as we could fall into false signals in our operations.

At this point we should not focus our attention only on the line as, as we have observed in the series of publications on the ICHIMOKU-KINKO-HYO, each line plays a key role in this, hence the clear understanding of each pattern, allows us to obtain valuable information about the market.

I hope you have found useful, the approaches here thrown and we will see you in future installments.

[1] Ichimoku Kinko Hyo. Article: Online Access