In the wiki section on the "Kijun Sen Cross strategy", the Case Study says this. "While the initial cross is above the kumo and therefore a relatively string cross, it is still beneath a very key chikou span level ... so we wait until we get a close above that level before entering...".
What's meant by this "a very key chikou span level"?
Thanks
Rachel
Hi Rachel,
Welcome to the forum and thanks for your question.
In this case, I am referring to the fact that the chikou span provides us with indications of possible support and resistance areas and, as such, should always be consulted when looking at a potential trade setup. There's nothing magic here - the chikou span is merely the value of the close of prior periods time-shifted 26 periods behind current price. Goichi Hosoda (the creator of Ichimoku Kinko Hyo) considered the value of the close the most significant among the four traditional values provided by a price bar (open, close, high, low), and the chikou span provides a visual representation of that.
As in any style of trading, we must consider prior levels of support and resistance before initiating a position to give us the highest probability trade, and Ichimoku is no different in this aspect. What is different is Ichimoku's reliance on using the
close of price to determine these levels of S&R as opposed to the high/low, which is more common in western charting systems.
I recommend getting into the habit of always finding and marking out your most significant chikou span levels on the time frames you are consulting. Look for areas where you multiple chikou span levels coinciding at or near the same price level, as these will be the more significant S&R areas. Try to be relatively conservative in which levels you choose to mark, since marking every level of the chikou span will turn your chart into a mess of horizontal lines and will only confuse you. This can be a bit difficult at first, but if you only mark those areas where the multiple points of the chikou span are clustered close to one another, that should provide you with a solid start.
Hope this helps.
Best,
Ian
