1/3/2018 Ichimoku Number Theory - An Introduction | 2nd Skies Forex

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Ichimoku Number Theory – An

Introduction
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For all those traders interested or currently trading Ichimoku, you will not want
to miss this article.

Although I am heading out in a few hours with my girlfriend to Harbin Hot

Springs, I wanted to write a brief introduction to Ichimoku Number Theory as
there has been a lot of questions (and confusion) about ichimoku settings, time
frames, etc.

The basis of Ichimoku as known to most is the 5 lines;

1) Tenkan Line
2) Kijun Line
3) Senkou Span A (part of the Kumo)
4) Senkou Span B (other part of the Kumo)
5) Chikou Line

Almost 95% of the commentary, traders, educators and understanding of the

ichimoku kinko hyo view this as the basis of ichimoku.

This is actually incorrect.

The basis of Ichimoku are the three pillars which are listed below;
1) Ichimoku Number Theory (also has to do with time)
2) Ichimoku Wave Theory
3) Ichimoku Price Theory

These are the three pillars of ichimoku, but the root of all them is based on the
ichimoku number theory.

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1/3/2018 Ichimoku Number Theory - An Introduction | 2nd Skies Forex

4.5yrs
Goichi Hosada (founder of Ichimoku)  in his development of ichimoku, spent
4.5yrs of his study just on number theory.  He studied pretty much every Eastern
and Western theory under the sun, and eventually settled upon 3 basis numbers
that he not only made the basis of ichimoku theory, but underlined all of reality.

NOTE: I have an interesting follow up story to tell about this so remind me to

discuss it later.

The three numbers he made as the basis for ichimoku were 9, 17 and 26.

So the idea that the reason why the Kijun was set to 26 periods had to do with
the former 6 day Japanese trading week is false.
The kijun was set to this measurement, along with the tenkan – based on his
findings.

What this means is, for those who are asking the question about should we
adjust the settings since we are not working with a full trading week, or are
trading an intraday time frame, is in e ect answered. Regardless of the trading
week or time frame, we are best served from an ichimoku perspective keeping
the original settings.  So hopefully this puts that one to rest and the kabbash on
all the alternative theories.

The 10 Numbers
Although there were 3 basic numbers which underlie the entire set of ichimoku
numbers, there were 10 in all.  They are listed below;
9
17
26
*These three represent the basic or simple numbers
33
42
65
76
129
172
200-257 

Now if you do a quick calculation, 9+17 = 26.  26+17 = 42+1.  33+9 = 42.  33×2 =
65+1. 42+33 = 76-1. 65×2 = 129+1. 129+42 = 172-1.  So all these numbers are
interrelated and all comprised of the basic numbers in some way.

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There are names for these numbers like one section, two sections, one period,
etc. which I will get into a later date, but the basic three names are;
one section (9)
two sections (17)
1 period (26)

So if you see me using this terminology in my future ichimoku posts, you will
know what I am talking about.

Use in Practice
Ideally, ichimoku number/time theory should be used in combination with the
price and wave theories.  So by itself, it is limited.  But we can start the
introduction with the basic concept.  This is, the market is more likely to have a
turning point or strong price action reaction around these numbers.  They are
not meant to be treated as fixed in stone numbers, but moreso higher
probability turning or reaction points.  An example of this is below;

AUDUSD Daily Chart

Now using the chart above, lets make some observations:

A-B = 41 (1 short of 42 bar move)
B-C = 16 (1 short of two section move/17)
C-D = 26 bars exactly or one period
D-E = 18 bars (1 short of two sections move)
E-F = 26 bars exactly or one period

Now this is just one chart and there will be many that are not so accurate upon
first glance, and others that are.  JPY pairs tend to move and respond more to
the ichimoku paramters and numbers since a great amount of Japanese traders

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1/3/2018 Ichimoku Number Theory - An Introduction | 2nd Skies Forex

are primarily trading ichimoku strategies, and therefore are making trades
based on it.

However, from my experience, this works on most pairs, commodities, and

indices across the board, so quite potent and relevant.  Keep in mind, it is
important to understand we do not just apply the ichimoku number/time theory
in isolation, but mate it with ichimoku price and wave theory.  When combined,
they become very highly predictive tools for catching major turning points,
finding precise targets and determining future support and resistance levels, so
powerful tools when yielded properly.

In Summary
Although this is just an introduction, I hope this gives you a better
understanding of Ichimoku and how not to relate to it in just its basic form, but
understand there is more going on than just the 5 lines.  Anyone just teaching
and professing the 5 lines as the be all end all of ichimoku have very little
understanding of it.

Goichi Hosada once said about this in the mid 80’s;

“Of the 10,000 or so people who are practicing and trading ichimoku, only about
10 really understand it.”

Keep in mind, when he was saying it, he was including himself and his grandson,
so not many.  This is because people get too fascinated with the 5 lines and
relate to that only without ever taking the time to understand what it is all
about.  Although the 5 lines are potent and informative by themselves, they are
a small fraction of the ichimoku picture and information contained in the
ichimoku kinko hyo chart, so keep this in perspective.

I’ll be doing further introductory articles about these additional elements in the
future over the next several months, but hopefully this sparks your curiosity and
imagination for now.

For those wanting to learn how to trade the Ichimoku Cloud, ichimoku time,
ichimoku price and ichimoku wave theory, along with lifetime access to the
Ichimoku traders forum, using rule-based systems, make sure to check out my
Advanced Ichimoku Course.

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