Ichimoku Theories

The Ichimoku Theories indicator is your all-in-one solution for leveraging the power of Ichimoku Kinkō Hyō, an advanced trading indicator that combines multiple theories for comprehensive market analysis. Created based on the work of Goichi Hosoda, this indicator not only includes the conventional Ichimoku Kinkō Hyō with its five crucial lines and kumo, but also integrates Time Theory, Wave Theory, and Price Theory.

Traders can utilize this indicator to identify market trends, cycles, structures, and potential price targets, making it suitable for all market conditions. Below is an expanded look into how you can employ these theories for better trading insights.

Understanding Ichimoku Kinkō Hyō

Ichimoku with lines only, Kumo only and both together

The Ichimoku indicator serves as a comprehensive tool for market analysis rather than mere prediction. Its strength lies in its trend-following nature, which works best in trending markets. The indicator assists traders in deciphering market behavior and anticipating future actions by analyzing various pre-defined time ranges:

• Tenkan Sen: Midpoint of the range over the last 9 periods
• Kinjun Sen: Midpoint of the range over the last 26 periods
• Senkou Span A: Midpoint between Tenkan Sen and Kijun Sen, projected 26 periods ahead
• Senkou Span B: Midpoint of the range over the last 52 periods, also projected 26 periods ahead
• Chikou Span: Closing price plotted 26 periods back
• Kumo: The space between Senkou Span A and B; acts as an area of support or resistance

How to Use Time Theory for Better Market Timing

Current cycles and forecast

Time Theory enables traders to identify and forecast market cycles using the Kihon Suchi sequence, which consists of key numbers like 9 and 26, and their combinations. Working on the principle that markets move in time-defined cycles, Time Theory becomes indispensable for recognizing historical, current, and future cycles.

Identifying and Forecasting Time Cycles

Presentation of 4 different modes: SWINGS, HIGHS, KINJUN, and WAVES

The tool marks detected cycles and their lengths on the chart, using varied settings:

• Time Cycle Mode: Access up to 7 different cycle detection modes
• Wave Cycle: Utilizes active wave modes from the Wave Theory settings
• Show/Hide Time Cycles: Simplify chart view by toggling cycles
• Display last X time cycles: Configure how many cycles to show

Time Cycle Forecasting

Showcasing the two forecasting patterns: Kihon Suchi and Taito Suchi

Predict future cycles by plotting significant lines:

• Show Time Cycle Forecast: Keeps your chart clutter-free
• Forecast Pattern Selection: Choose between Kihon Suchi or Taito Suchi patterns
• Anchor forecast: Customize starting point with detected cycles

Decoding Wave Theory for Market Structure

All waves activated with overlapping

Wave Theory provides insights into market structure, anticipating its next moves by categorizing movements into basic and complex waves:

• Basic Waves: Activate and study I, V, and N waves
• Complex Waves: Examine P, Y, and W waves
• Overlap Detection: Ensures completeness in wave identification

Types of Waves

The three basic waves

• I Wave: Single-directional movement
• V Wave: Bidirectional movement
• N Wave: Three-directional push and pull

Three complex waves

• P Wave: Sign of contracting market
• Y Wave: Indication of market expansion
• W Wave: Double top or bottom scenarios

Price Theory: Predicting Market Potential

All targets for the current N wave with their calculations

By identifying developing N waves, this theory helps traders anticipate significant price targets. It includes basic and extended price targets, which you can toggle in the settings.

Integrating Theories for Comprehensive Market Analysis

Daily chart of Nasdaq 100 futures (NQ1!) with our Ichimoku analysis

Successfully analyzing markets involves a mixed approach:

• Detect current time cycles and wave structures
• Forecast new cycles and price levels

In this example, we spot a Taito Suchi, characterized by 41-candle legs in each I wave. Forecasting to a key date reveals upcoming cycles and potential price targets that can shift based on market conditions. It is essential to understand that these are not predictive but insightful for setting informed trading expectations.

Customizing Your Indicator Settings

• Swing Highs & Lows: Toggle identification points
• Swing Length: Adjust to capture significant swings

Ichimoku Kinkō Hyō Settings

• Enable Lines and Kumo: Toggle Ichimoku visuals
• Length Adjustments: For Tenkan Sen, Kijun Sen, etc.
• Offset Configurations: Modify Chikou and Senkou spans

Time Theory Settings

• Enable Forecasts: Toggle time cycle projections
• Choose Pattern: Switch between Kihon and Taito Suchi
• Anchor Options: Navigate historical data for anchoring

Wave Theory Settings

• Activate Basic/Complex Waves: Tailor wave displays
• Overlap Display: Customize overlap visuals

Price Theory Settings

• Target Lines: Enable/Disable basic and extended targets

FAQ

How can I access the Ichimoku Theories indicator?

You can access the Ichimoku Theories indicator on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.

Is the Ichimoku Theories indicator suitable for all markets?

Yes, it’s versatile enough to analyze different markets, but it works best in trending conditions due to its trend-following nature.