Jay Ng explains the Japanese technical indicator, Ichimoku Kinko Hyo, and provides analysis of the USD/CHF.

Ichimoku Kinko Hyo
Ichimoku Kinko Hyo is a Japanese technical indicator used to trade currencies, commodities, futures, and stocks. Ichimoku means ‘one glance’, Kinko means ‘equilibrium’ (or ‘balance’), and Hyo means ‘chart’, so together the words read as ‘one glance equilibrium chart’, describing how traders can very quickly discern the price action of an asset, and make effective trading decisions.

While this indicator can be implemented alongside other indicators such as trend lines and Fibonacci retracements, it is a powerful trading system on its own, because it combines elements of time, sentiment, volatility, and support and resistance.

Ichimoku Kinko Hyo was created by Goichi Hosoda, a Japanese journalist. After twenty years of testing and refining, the system was released to the public in 1968. Step into any Japanese trading room and you will see the indicator displayed across most traders’ screens. The Western world adopted this trading system only recently, because there were no traders able to translate the methodology into the English language, which kept this trading secret among the Japanese community. But that is fast changing, with the use of this trading indicator growing exponentially in recent years. It has applications across asset classes, including even options trading.