Saturday, December 31, 2011

Ichimoku Study - BSE Sensex - End 2011

BSE  Sensex - Month Chart - End of 2011 - with the Ichimoku  Cloud

This study is rather long term - appropriate for a new year - so here is wishing you a happy 2012 :) - happy learning !!

The Ichimoku Cloud is a versatile indicator that defines support, resistance, identifies trend direction, gauges momentum and gives one trading signals.

The Ichimoku parts - see chart above..

The Tenkan Sen - red line
The Kijun Sen - blue line
The Chikou Span - purple line
The Senkou Span A - black line
The Senkou Span B - grey line
The Kumo - grey shaded area

Read up the funda on this at the reference link at the bottom of this post to learn about this indicator..

Our observations using the Monthly chart - each candle is one month - period 2004 to 2011 - 7 year study.
1. Indian Equity markets were in Bull mode from 2004.
2. The crash of 2008 brought the market into the kumo (grey shade) - just about neutral / flat zone (not even bear zone)!!
3. Since the 2009 rise from the kumo - it was soon back to Bull mode.

1. We have a weak kijun sen (blue) cross Sell signal as the recent bearish cross happens above the kumo.
2. We have a weak tenkan sen (red) /kijun sen (blue) cross Sell signal - as the bearish cross happens above the kumo.
3. The current close price (as depicted by the chikou span - purple) is lower than the price 26 periods ago,  this indicates that there is a potential for more bearish price action to come.
4. The price is above the Kumo at present and that is Bull zone.
5. There is a Senkou Span Cross coming up which may be Bullish based on present view...

Some useful free links I googled -

To create Ichimoku Charts - if your chart provider does not have it...

To learn about the Ichimoku Charts