Please pause this video now to read my disclaimer. In today's video we're going to talk about the
Ichimoku’s base and conversion lines. In the previous video we already looked at the base line,
also known as Kijun Sen and Kijun Sen helped us yesterday to determine where support and
resistance lines were in the charts. In today's video I'm going to talk about Tenkan Sen
which is the conversion line and Kijun Sen which is the baseline and I'm going to show you how they
work together and what it tells us in the chart. This is our standard price chart for Bitcoin/US
dollar. The indicator Ichimoku is on full display. I'm going to take out two elements of Ichimoku
to make it a little bit clearer and what we are seeing here is price and I've dimmed
the colours of price a little bit down so that we can see the blue line and the black line a little
bit clearer. First of all we have Tenkan Sen which is the blue line and the Tenkan Sen is calculated
like this; it's the highest high in price plus the lowest low in price divided by two for the
last nine periods. Since this is a day chart, each period is a day so it's calculated over nine days.
When we look at the black line which is called Kijun Sen that is calculated as the highest high
plus the lowest low in price divided by 2 for the past 26 periods. So that means that Tenkan Sen is
the fast moving line and Kijun Sen is the slow moving line. What I'd like to show you in this
video is to actually wind the clock back to about a year or so and to see the chart move so that you
get a better idea of what Tenkan Sen and Kijun Sen do and during this playback of the market
I will stop it and make some comments so that you can learn from what you see on the chart.
Okay so what we have here, this is all the way back from about July 2020, price moved
sideways and then you can see here from November 2020, it really started taking off and the
reason why I can see why momentum is high is that both Tenkan Sen and Kijun Sen
are pointing up quite steeply so this is is a very good sign that the market moving up is
really quite strong. So let's continue the video and see what is going to happen going forward.
At this point we can see a crossover of Kijun Sen and Tenkan Sen and that means that the market is
certainly slowing down and there's some down movement and there's a potentially a change
in trends. Now this is the first signal that Ichimoku will give you that a trend is changing.
It's not a confirmation of change but it's certainly the first indication. Let's move on.
The way that Kijun Sen and Tenkan Sen works, it's like elastic
so what happens is that the conversion line goes up high, up high, and you will see
the gap between the conversion line and the baseline getting bigger and it's
like elastic because in essence the market wants to be in equilibrium so eventually
the market wants to see that Kijun Sen and Tenkan Sen are coming back together again and
that's exactly what happened here on this chart where we had uh Tenkan Sen go up up up up up.
Kijun Sen not being quite as fast and here the market moved back to
equilibrium just here so equilibrium is here and in fact Kijun Sen and Tenkan Sen
have crossed over giving the first indication of a potential change in direction. Let's continue
now we can see in this area that the market is ranging somewhat. We've got some higher highs
we've got some lower lows and it's ranging round about here but what is interesting to see is that
with this TK crossover here the steepness of this down is really quite steep so I would expect that
we're going to get a fairly big down here but let's see how this plays out. So let's continue.
I'm just stopping here because I want you to
have a look here where there is again ranging in price in the market. In this ,in this area
and we are now seeing that the fast moving average is about to cross the slow moving average so
Tenkan Sen is crossing over Kijun Sen meaning that we're likely to go into a bullish period.
Again you can see the steepness of the conversion line here Tenkan Sen and this is a good sign that
the market is likely to move up quite steeply. So let's have a look how that pans out.
Interesting to see here is where we have a crossover just about here. We can see that
Kijun Sen and Tenkan Sen are together and they're moving up together
and that is the strongest sign of momentum. We also saw that here again Kijun Sen and
Tenkan Sen were moving down together and that meant very high momentum of the price drop.
And we see this here as well so I should think that momentum will take the price
even higher but let's have a look whether that's going to pan out like that.
In this area here, we have a higher high in price. Just here
we've got a crossover here and a crossover here. This is a bearish crossover and that
again is the first sign that price may be moving down from here on in.
What will be interesting to see now is the momentum of price going down. Let's have a look.
Interesting to see at this level here, is that price came down from here
and it stalled. Now the reason why it's stalled is that here we have a resistance line. This was
a resistance line here, here it is a support line but we saw price breaking through it.
Two things that we have seen; first of all we looked at the steepness of those lines. How they
move with price. When we see a very steep upward movement of Kijun Sen and Tenkan Sen together
that's an indication of high momentum and that could be bullish or bearish depending on the
direction of the market. We've also learned that when we see a TK crossover that is when Tenkan Sen
crosses over Kijun Sen, that we have a bullish signal when Tenkan Sen crosses below Kijun Sen
we have a bearish indication. I hope that you've enjoyed this video. There are more to come on
Ichimoku. Ichimoku is a massive subject and can be very intimidating. I want to take it bit by bit so
in the previous video we looked at how I use Kijunn Sen to determine support and resistance
lines. Today we've taken it one step further. We've looked at Kijun Sen in conjunction with
Tenkan Sen and hopefully bit by bit you get to understand Ichimoku, or at least that is
my objective. I hope you've enjoyed this video. Please click the like subscribe and bell button
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