Sunday, April 22, 2012

The BSE 30 - Ichimoku Study - Week: 16 April to 20 April 2012 - Bulls Pierce thro'

......Regulars can skip below and go straight to the chart......


We do an weekly Ichimoku study, to complement our 'Triple Screen Technical Analysis', of the markets we study.
When taking the 'weekly' time frame, to use the Ichimoku Cloud, we need to consider...

The standard settings for an Ichimoku Kinko Hyo chart are 9, 26, 52 and are used on EOD charts.  
When Ichimoku was created back in the 1930s, a trading week was 6 days long.  So we have one and a half week(9), one month(26) and two months(52). 
Now that the trading week is 5 days, we should actually use 7,  22 and 44 instead. 
However, the majority of systems, worldwide, still use the old settings 9, 26, 52. 

We need to study markets, on a weekly basis on this Blog.  
How do we fit 52, 26 and 9 into that need?  With one candle being one week?
There are 52 weeks in a year, 26 weeks form two quarters (or a half year) and 9 weeks equal about 2 months.  Fits the old logic - albeit differently.
Presto, we have a longer term view with the same settings!

So, if you like to move off the beaten track, for a on...

Quick Reference : 
Chikou Span - purple line,
Kijun Sen - blue line, 
Senkou Span A - black line, 
Senkou Span B - grey line, 
Kumo - grey shaded area,
Tenkan Sen - red line.

Useful resources (free) from the Web:

BSE 30: Medium Term View (or) Week Chart (or) EOW with the Ichimoku Cloud:
The BSE Sensex 30 - End of Week Chart - 20 April 2012  

Last 6 Signals seen on BSE 30 - Week Chart (EOW) marked on chart above:
1. Senkou Span Cross: Strong Bearish Signal (S)
2. Chikou Span Cross: Weak Bullish Signal (C)
3. The Kijun sen cross: Weak Bullish Signal (K)
4. The Flat Kumo: Bullish Signal (Ko)
5. The Tenkan Sen/Kijun Sen Cross: Weak Bullish Signal (T)
6. The Kumo Breakout: Bearish Signal (B)

Also marked with the blue arrows see...
2: The Chikou Span (purple line) has deflected off the price line, instead of crossing bearishly below it .. This is Bullish. 
3: The last candle has moved back into the Kumo - refer the Bearish Kumo breakout (B
3: Just as in last week, the Price is above the Kijun Sen and M VWAP 34 -  This is Bullish .
3: The last two candles form a Piercing Pattern (Bullish). FYI, we studied earlier (click) that the Nifty showed a Bullish Engulfing with the last two candles, at this same time frame.
4. A Bullish Senkou Span cross seems imminent - may be neutral. 

Here are some free reads for the weekend on the Pattern above...

Conclusion: Bulls have wrested back the advantage and have more than an even chance for a move up.