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Ichimoku Forex Forecast by Integra Capital Ltd.
16-22 October 2006
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Abbreviated: IKH - Ishimoku Kinko Hyo, TS - Tenkan-sen, KS - Kijun-sen, SSA - Senkou Span A, SSB - Senkou Span B, ChS - Chinkou Span, Up Cumo - yellow "cloud", Down Cumo - brown "cloud"

USDCHF

On Tuesday the Swiss franc intensively oscillated and on results of day a little declined, formed a black candlestick "hummer", rebounded by the bottom shadow from support on TS. It testifies to the market uncertainty with probability of renewal of rise. However in today's Asian trading session slow fall of a rate has proceeded, but herewith all IKH-patterns: a disposition of a rate above Cumo, and ChS above the price chart, "a golden cross", future Up Cumo and "a three-line pattern" speak about preservation of strength of a Bullish trend and probability of its renewal.

EURUSD

Euro on Tuesday oscillated at one level, formed a candlestick "a white spinning top" with the long shadows, point to balance and uncertainty in the market, and in today's Asian session slow rise of the European currency has proceeded. Despite of some correction of the price observable now in the market, all IKH-patterns: a disposition of the price below Cumo, and ChS below the price chart, "a deadly cross", "a three-line pattern" and future Down Cumo testify to kept strength of a Bearish trend on European currency and probability of its renewal. Now resistance is fast trend line TS.

GBPUSD

On Tuesday the British pound considerably rose in price, and its rate entranced within the Cumo had breakout resistance on Cumo's bottom boundary SSB, and in today's Asian session it has oscillated at one level. The entrance of the price to Cumo means a final failure of attempt to begin a descending trend and start of flat dynamics between support on SSB and resistance on SSA. Horizontality of trend lines TS and KS and interlace ChS with the price chart also point to consolidation of a rate, but "a deadly cross" and future Down Cumo still testify to an opportunity of renewal of falling of the British currency.

USDJPY

The Japanese Yen on Tuesday continued steady falling, and in today's Asian session it has a little risen. Decline of price below support on fast trend line TS speaks about the beginning of descending correction of a Bullish trend with the target on currently support KS. But herewith almost all IKH-patterns: a disposition of a rate above Up Cumo, and ChS above the price chart and "a golden cross" while testify to preservation of strength of a Bullish trend and an opportunity of its renewal. A pattern to this will be mount of the price above upsurge TS.

USDCAD

On Tuesday the Canadian dollar the rose and a white candlestick "blank closings bozu" speaks about an opportunity of continuation of rise. However in today's Asian session the rate has a little fallen. Now all IKH-patterns: mount of the price above Cumo, "a golden cross", rise of ChS above the price chart, "a three-line pattern" and future Up Cumo point to probability of continuation of an up trend. The support is fast trend line TS.

AUDUSD

The Australian dollar on Tuesday and today's Asian session oscillated at the level of the Cumo's bottom boundary SSB that speaks about its consolidation. Horizontality of trend lines TS and KS, and interlacing ChS with the price chart also confirm consolidation of a rate, but disposition TS below KS and future Down Cumo testify to an opportunity of renewal of falling of a rate of the Australian currency. Now situations with it is ambiguity.

NZDUSD

On Tuesday the New Zealand dollar made weak attempt to breakout of resistance on conterminous trend lines TS and KS and formed a candlestick "a white shutting star", more soon forecasting fall, but in today's Asian session it has continued slow rise. Horizontality of conterminous trend lines TS and KS and interlacing ChS with the price chart speaks about consolidations of a rate, but rise of a rate above trend lines and a disposition of the price above wide Up Cumo, testify to an available opportunity of renewal of a Bullish trend. A pattern to this will be upsurge of support on fast trend lines TS.

GBPCHF

Cross-rate of the British pound to the Swiss franc on Tuesday considerably rose, and in today's Asian session it has a little fallen. All IKH-patterns: a disposition of a rate above wide Up Cumo, and ChS above the price chart, "a golden cross" and "a three-line pattern", speak about continuation of a steady Bullish trend, with the nearest support on fast trend lines TS. The rate of the British pound to US dollar has now got flat dynamics, and the Swiss franc was consolidated in an up trend that points to probability of consolidation of cross-rate of these currencies.

On Tuesday the US dollar continued to fell to the major currencies. The Swiss franc is consolidated in an up trend, the Japanese Yen begin a descending correction, and the Canadian dollar an up trend proceeds. The euro slowly rises in price and is consolidated, but all patterns to a down trend keep the strength, the British pound has got flat dynamics while its cross-rate to the Swiss franc continues an up trend. A situation with the Australian dollar ambiguity, it is possible to speak only about consolidation of the currency, and the New Zealand dollar tries to renew an up trend.

USDCHF

On Wednesday the Swiss franc intensively oscillated and on results of day formed a candlestick "a white spinning top" with the long shadows, testifying about balance and uncertainty in the market, and in today's Asian session the rate has remained on one level. Herewith all IKH-patterns: a disposition of a rate above Cumo, and ChS above the price chart, "a golden cross ", future Up Cumo and "a tree-line pattern " speak about preservation of strength of a Bullish trend and probability of its continuation.

EURUSD

Euro on Wednesday continued oscillations at one level, formed a candlestick "long-legged doji", point to balance and uncertainty in the market, and in today's Asian session there was an insignificant rise of the European currency. Despite of the consolidation of the price observable now in the market, all IKH-patterns: a disposition of the price below Cumo, and ChS below the price chart, "a deadly cross", " a tree-line pattern" and future down Cumo testify to kept of strength of a Bearish trend on European currency and probability of its continuation. Resistance now is fast trend line TS.

GBPUSD

On Wednesday the British pound fell in price, and generated a candlestick configuration "a dark cloud cover" usually previous falling of a rate, and in today's Asian session the British currency has slightly risen in price. The rate continues to remain within the Cumo that speaks about it flat dynamics between support on SSB and resistance on SSA. Horizontality of trend lines TS and KS and interlacing of ChS with the price chart also points to consolidation of a rate, but "a deadly cross " and future Down Cumo confirm a candlesticks Bearish pattern and testify to an opportunity of falling of the British currency.

USDJPY

The Japanese Yen on Wednesday rose, and formed a candlestick configuration "a piercing lines " testifying to probability of the further rise which was observed in today's Asian session. It means probable end of descending correction and attempt of renewal of a Bullish trend which point to almost all IKH-patterns: a disposition of a rate above Up Cumo, and ChS above the price chart and "a golden cross". A patterns to this will be mount of the price above raising TS, acting now in a role of resistance, but support is KS.

USDCAD

On Wednesday the Canadian dollar considerably fell, and generated a candlestick configuration "Bearish tasuki lines ", giving a weak pattern to the further falling, and in today's Asian session the rate has remained practically constant. Horizontality of trend lines TS and KS points to consolidation of a rate, but all IKH-patterns: mount of the price above Cumo, "a golden cross", rise ChS above the price chart, "a tree-line pattern" and future Up Cumo speak about probability of continuation of an up trend. Now the support is fast trend line TS.

AUDUSD

The Australian dollar on Wednesday has risen in price, and in today's Asian session remained constant, continuing to move from upsurge Cumo's bottom boundary SSB. It speaks about ambiguity dynamics of the Australian currency: mount of ChS above the price chart gives a Bullish pattern, but inability of a rate to breakout of SSB, disposition TS below KS and future Down Cumo testify to probability of renewal of falling of a rate.

NZDUSD

On Wednesday the New Zealand dollar continued to rise in price, finally having mounted above conterminous trend lines TS and KS, and in today's Asian trading session the rate has slightly fallen. Rise of a rate testifies to an opportunity of renewal a Bullish trend on which strength now, also points to a disposition of the price above a wide Up Cumo. But horizontality of conterminous trend lines TS and KS, and interlacing of ChS with the price chart also speaks that consolidation still is not finish and upsurge of fast trend line TS will be a final pattern to trend renewal.

GBPCHF

Cross-rate of the British pound to the Swiss franc on Wednesday a little fell, and in today's Asian session it remained almost on one level. But herewith all IKH-patterns: a disposition of a rate above wide Up Cumo, and ChS above the price chart, "the golden cross" and "a tree-line pattern", speak about continuation of a steady Bullish trend, with the nearest support on fast o?aiaiaie lines TS. The rate of the British pound to US dollar now has flat dynamics, and the Swiss franc while was consolidated in a Bullish trend that points to probability of consolidation of cross- rate of these currencies.

On Wednesday the US dollar was consolidated and showed different dynamics to the major currencies. The Swiss franc was consolidated in a Bullish trend, the Japanese Yen rose in price and tries to renew an up trend, and the Canadian dollar fell, but patterns about an up trend while keep the strength. The euro is consolidated in a down trend, and the British pound has flat dynamics while its cross-rate to the Swiss franc is in an up trend. The situation with the Australian dollar now rather not certain, and the New Zealand dollar finished consolidation and tries to renew a Bullish trend.

USDCHF

On Thursday the Swiss franc sharply fell, and declined on the one "figure", breakout the support on TS and almost reached KS, and in today's Asian trading session its decline has proceeded. It means the beginning of correction of an up trend with the target of falling on the basic trend line KS. But many IKH-patterns: a disposition of a rate above Cumo, and ChS above the price chart, "a golden cross" and future Up Cumo still point to kept of strength of a Bullish trend and probability of its renewal. A pattern to this will be mount of the price above upsurge TS.

EURUSD

Euro on Thursday considerably rose in price, having continued the raise and in today's Asian session. Breakout by a rate of resistance on fast trend line TS means the beginning of ascending correction with the target of rise on the basic trend line KS. But herewith many IKH-patterns: a disposition of the price below Cumo, and ChS below the price chart, "a deadly cross" and future Down Cumo testify to kept of strength of a Bearish trend on European currency and probability of its renewal. A pattern to this will be falling the price below decline TS.

GBPUSD

On Thursday the British pound rose in price, moved within the Cumo from support SSB to resistance SSA, and in today's Asian session its rate has oscillated at one level. The disposition of a rate in Cumo speaks about it flat dynamics and interlacing of ChS with the price chart confirms consolidation. However "a deadly cross" and future Down Cumo, testify to an opportunity of falling of the British currency.

USDJPY

The Japanese Yen on Thursday fell, tested by the bottom shadow of a black candlestick the support on the basic trend line KS, and in today's Asian session it has a little risen. If on results of the today's trades the rebound of the price from KS will be confirmed, it will give a pattern to renewal of a Bullish trend, about kept which strength speaks a disposition of a rate above Up Cumo, and ChS above the price chart and "a golden cross". At the other hand in case of the further falling and breakout the basic trend lines KS, the pair will be start the deep descending correction with the target of falling on next support SSA.

USDCAD

On Thursday the Canadian dollar sharply fell, and breakout the support on fast trend lines TS, and in today's Asian trading session the rate has slightly risen. Decline of the price below TS means the beginning of descending correction with the target of falling on the Cumo's upper boundary SSB. But many IKH-patterns: a disposition of the price above "cloud", "a gold cross", rise of ChS above the price chart and future Up Cumo speak about probability of renewal of an up trend. A pattern to this will be mount of the price above raising TS.

AUDUSD

The Australian dollar on Thursday continued to rise in price and, at last, entranced to Cumo, and in today's Asian session it has changed at one level. The disposition of the price within the Cumo points to flat dynamics of a rate of the Australian currency between support on SSB and resistance on SSA. Herewith mount of ChS above the price chart and rise of conterminous trend lines TS and KS gives a pattern about possible of continuation of rise, but future Down Cumo testify to probability of falling of a rate.

NZDUSD

On Thursday and today's Asian session the New Zealand dollar has continued to rise in price, finally having renewed a Bullish trend to which presence all IKH-patterns now testify: a disposition of the price above wide Up Cumo, and formed yesterday, rise ChS above the price chart, "a golden cross" and "a three-line pattern". The nearest support is fast trend line TS.

GBPCHF

Cross-rate of the British pound to the Swiss franc on Thursday essentially fell, having continued decline and in today's Asian session. Breakout by support on TS means the beginning of descending correction with the target of fall on the basic trend line KS. But herewith the majority of IKH-patterns: a disposition of a rate above wide Up Cumo, and ChS above the price chart, and "a golden cross" speak about preservation of strength of a Bullish trend and opportunity of its renewal. The pattern to this will be mount of the price above raising fast trend line TS. A rate of the British pound to US dollar has flat dynamics, and the Swiss dollar start the descending correction that points to probability of some rise of cross-rate of these currencies.

On Thursday the US dollar considerably fell in price to major currencies. The Swiss franc, the Japanese Yen and the Canadian dollar have declined and have begun descending correction, at preservation of patterns to an opportunity of renewal the Bullish trends. The euro the beginning ascending correction, and the British pound has flat dynamics, while its cross-rate to the Swiss franc, the beginnings descending correction of a Bullish trend. The Australian dollar has flat dynamics in a stage of rise, and the New Zealand dollar confidently rise in a strength Bullish trend.

Ichimoku Kinko Hyo is Japanese for "one glance cloud chart." It consists of five lines called Tenkan-sen, Kijun-sen (sen is Japanese for line), Senkou Span A, Senkou Span B and Chinkou Span. The calculation uses four different time periods which we call termT, termK, termS and termC. The Ichimoku Kinko Hyo is graphed over the closing price line. The space between the Senkou spans is called the Cloud, and is usually graphed in a hatched pattern.

The Senkou Spans are support and resistance lines. When the price is in the Cloud, the market is non-trending. When the price is above the Cloud, the higher Span is the first support level and the lower Span is the second support level. When the price is below the Cloud, the lower Span is the first resistance level and the higher Span is the second resistance level.

Kijun-sen and Tenkan-sen are trend indicators. When the price is above the Kijun-sen, prices will likely continue to go up, when the price is below the Kijun-sen, prices will likely continue to go down. The direction of the Tenkan-sen indicates the direction of the trend. If the Tenkan-sen is flat, the market is in a non-trending channel.

The Ichimoku Kinko Hyo Japanese charting technique was developed before World War II with the aim of portraying - in a snapshot - where the price was heading and when was the right time to enter or exit the market. This was all performed without the aid of any other technical analysis technique (or study).

The word Ichimoku can be translated to mean "a glance" or "one look". Kinko translates into "equilibrium" or "balance", with respect to price and time, and Hyo is the Japanese word for "chart". Thus, Ichimoku Kinko Hyo simply means "a glance at an equilibrium chart", providing a panoramic view of where prices are likely to go and the position one should undertake.

Invented by a Japanese journalist with a pen name of "Ichimoku Sanjin", meaning "a glance of a mountain man", Ichimoku charts have become a popular trading tool in Japan, not only with the equity market, but in the currency, bond, futures, commodity and options markets as well. The technique was published over 30 years ago but has only gained international attention within the last few years.

The Ichimoku chart consists of five lines. The calculation for four of these lines involves taking only the midpoints of previous highs and lows, similar to moving average studies. Yet even with this simplicity, the completed chart is able to present a clear perspective of the price action.

Ichimoku uses three key time periods for its input parameters: 9, 26, and 52. When Ichimoku was created back in the 1930s, a trading week was 6 days long. These parameters, thus, represent one and a half week, one month, and two months, respectively. Now that the trading week is 5 days, one may want to modify the parameters to 7, 22, and 44.

Moreover, there are, in fact, different levels of strengths for the buy and sell signals of an Ichimoku chart. First, if there was a bullish crossover signal and the price, at that time, was trading above the Kumo (or cloud), this would be considered a very strong buy signal. In contrast, if there was a bearish crossover signal and the price, at that time, was trading below the Kumo, this would be considered a very strong sell signal. Secondly, a normal buy or sell signal would be issued if the price was trading within the Kumo when the crossover took place. Thirdly, a weak buy signal would be issued if there was a bullish crossover that occurred while the price was trading below the Kumo. On the other hand, a weak signal would be issued if there was a bearish crossover that occurred when the price was trading above the Kumo.

Another striking feature of the Ichimoku charting technique is the identification of support and resistance levels. These levels can be predicted by the presence of the Kumo. The Kumo can also be used to help identify the prevailing trend of the market. If the price is above the Kumo, the prevailing trend is said to be up. And if the price is below the Kumo, the prevailing trend is said to be down.

A final feature of Ichimoku is the Chikou Span. This line can also be used to determine the strength of the buy or sell signal. If the Chikou Span was below the closing price and a sell signal was issued, then the strength is with the sellers, otherwise it is a weak signal. Conversely, if there was a buy signal and the Chikou Span was above the price, then there is strength to the upside, otherwise it can be considered a weak buy signal. This feature can also be incorporated into the other signals.

Chinkou Span shows the closing price of the current candle shifted backwards by the value of the second time interval. The distance between the Senkou lines is hatched with another color and called 'cloud'. If the price is between these lines, the market should be considered as non-trend, and then the cloud margins form the support and opposition levels. If the price is above the cloud, its upper line forms the first support level, and the second line forms the second support level. If the price is below cloud, the lower line forms the first opposition level, and the upper one forms the second level. If the "Chinkou Span" line traverses the price chart in the bottom-up direction it is signal to buy. If the "Chinkou Span" line traverses the price chart in the top-down direction it is signal to sell. "Kijun-sen" is used as an indicator of the market movement. If the price is higher than this indicator, the prices will probably continue to increase. When the price traverses this line the further trend changing is possible.

Another kind of using the "Kijun-sen" is giving signals. Signal to buy is generated when the "Tenkan-sen" line traverses the "Kijun-sen" in the bottom-up direction. Top-down direction is the signal to sell. "Tenkan-sen" is used as an indicator of the market trend. If this line increases or decreases, the trend exists. When it goes horizontally, it means that the market has come into the channel.

Most traditional technical analysis techniques are based on the open, high, low, close or average price. Others may use volatility while fixed scales such as Fibonacci numbers have also been applied. But the results are the same. Support and resistance levels are always depicted as a point or a line.