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Sunday, July 14, 2013

Ichimoku Indicator Setup for Ninjatrader

Ichimoku Indicator Setup for Ninjatrader

Ichimoku is a chart developed by Goichi Hosoda, and was originally intended for daily charts. It is intended to find an equilibrium on the charts and uses 2 moving averages ; 9 and 26. The number 26 comes from the number of days that the Tokyo exchange was open per Month. But all periods can be changed and optimized as we will be using faster timeframe charts instead of daily.

Lines of the Ichimoku :

  • TenkanSen ( fast moving - 9 bars of period )
  • KijunSen ( slow moving - 26 bars of period )

Cloud of the Ichimoku

Shaded area between 2 lines :

  • Senkou Span A ( average of 2 moving averages, and delayed 26 bars into the future )
  • Senkou Span B ( moving average of 52 bars delayed 26 bars into the future )
The Cloud can be used as a Support and Resistance Level ; it has different color depending on the relative position of the Sekou A and Senkou B Lines.

We can use a crossover of the fast and slow lines ( TenkanSen vs KijunSen ) as a trigger signal, and then watch for 2 additional conditions ;
  • Entry is above the Cloud, so we dont trade against it
  • Cloud Color if same sign as current trade
On the following Chart we have an example of a Long Entry on a Standard and Poors ( ES ) Daily Chart :

This ES Long On happened on ends of 2011, last days of December in the area between 1170 to 1200.
Next Short Signal ( against the cloud ) happened on April 2012 at the 1350-1370 area with more than 150 ES points in just 4 months.

On the following Chart we can see the end of the Trade using a Counter Trend signal of same setup as an exit for the Initial Trade :

The Cloud is also useful to define the size of the support zone and the stop needed for the trade.

We can also change the default 9,26,52 settings when applying this setup to faster timeframes ;

This is an example on a crude oil  ( CL ) futures 300 Ticks chart :

This is another example on a 9 Range TF ( Russel 2000) Chart

You can get more info about this indicator on the following link

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  1. what time frame is best to use to know market direction

    1. It was designed to daily charts, but it can be used on 1 minute or 5 minutes charts too.
      ( I suggest using minute charts, not range, renko and other bar types )