KIJUN - SEN CROSS STRATEGY Learning & Executing The Kijun-Sen Cross Strategy Basics Visual Guide Creation of the Ichimoku Chart This is a GBP/USD 1D chart with a complete Ichimoku Kinko Hyo chart installed. Basic tags are pointing to the 5 lines that make up the chart. This Ichimoku Chart is set at "standard settings". Standard settings are 9, 26, 52 - with a horizontal shift of 26
Visuals of Kumo or "cloud" formations…
The big "yellow" rings represent Kumo formations. Kumo's can provide a great deal of support and resistance for the price action. If Price crosses "into" a Kumo it is often best to "sideline" trading, and sacrafice any pips that may be generated. Kumo's can cause very "choppy" and non-directional patterns.
In the above charts we can clearly see that Ichimoku presented without a clear explanation, could lead to confusion. It is the goal of this training to not only dispell any confusion, but also give you the information that you need to fully engage Ichimoku Kinko Hyo. The Kijun-sen Cross strategy is 100% dependent on you being able to identify the characteristics of each of the 5 lines within the charting system and how they effect one another. In Summary What we find is that once we know "what" we are looking at within the structure of the Ichimoku chart, we find that it is not as complicated as it may seem. The key to understanding the Kijun-sen cross or any trade set-up within Ichimoku Kinko Hyo is "knowing" what you are looking at, and how each of the 5 lines within Ichimoku work with each other, to deliver a clear view of market direction, and thresholds.
Key Characteristics Key Chacteristics of the Kijun-sen The highest high + lowest low/ 2 calculated over the last 22 periods… This is the text book version of what the Kijun-sen is and it's structure, however we will be looking at, most importantly it's relationship to "price". It's relationship to "price" is the key component of understanding it well enough to execute successful trades using it. So lets look at some of the key charateristics of the Kijun-sen. 1. When price traverses (crosses) the Kijun-sen from the bottom up, this signals a buy. Please refer to chart 1.0.
Chart 1.0: Kijun-sen and price "bull" signal. GBP/USD 1D
As we can see in this chart, when price crossed the Kijun-sen from the bottom up the price continued in an upward momentum to deliver a pretty impressive amount of pips. Most importantly what we want to notice, is that when price crossed the Kijun-sen direction did not change until price crossed the Kijun-sn again. So in effect, the "Trend" remained relevant as long as the price remained above the Kijun-sen as we will see in Chart 1.1…
Chart 1.1: Kijun-sen bull signal results. GBP/USD 1D
As we can see in this chart study once price crossed the Kijun-sen at the 1.7400 level, it continued with "upward" momentum to the 1.9024 level which would have produced well over 2000 pips for a single execution, however; you can also see that if you follow exit rules of the Kijun-sen Cross strategy then your exit would have still yielded well over 1000 pips. So with that said.. let's look at Kijun-sen Cross Strategy rules to this point. Rules: 1. If price crosses the Kijun-sen from the bottom up, this is a signal to buy (long) 2. If price crosses the Kijun-sen from the top down, this is a signal to sell (short) 3. Hold position until price crosses in the opposite direction.
Rule 3 Contingencies: 3.a If a predetermined exit is charted, execute the exit and await the cross for the re-entry. Summary In looking at the basic characteristice of the Kijun-sen we accomplish two things. 1. We start understanding the relationship of the Kijun-sen and price, and we quickly see that the Kijun-sen and price are closely related. This is important to understand now, because it will be important when we start looking at Stop Loss execution. 2. We learn that a Kijun-sen Cross trade can take days, weeks, even months to mature which suggest that the optimal way to trade the Kijun-sen Cross strategy is over time. 3. Executing the Kijun-sen Cross strategy is closely related to Trend Trading bcause what you are essentially doing is establishing a trend entry and exit using the Kijun-sen. Addittional Chart Studies:
Chart 1.2: Various opportunities and exit strategies…
Kijun Sen Solo Trading Kijun-sen Solo Trading Kijun-sen Solo Trading. Learning how to use the Kijun-sen ONLy to trade will give you the discipline necessary to fully engage and execute the Kijun-sen Cross Strategy with the entire Ichimoku system installed on your charts. Based on what we have learned in "The Characteristics of the Kijun-sen" what assumptions can we make?
1. When price traverses the Kijun-sen in either the up or down direction this gives a signal to buy or to sell. 2. If a position is taken then it is also safe to say that, the position can be maintained until price traverses the Kijun-sen again..
Kijun-sen solo trading is a very easy to master mode of trading, however; it is optimal to execute a Kijun-sen Solo Trade on a 1D chart or higher, ie 1 Week or 1 Month to best see this. It is best to work within a live environment.
Summary In Summary What we find is that once we know "what" we are looking at within the structure of the Ichimoku chart, we find that it is not as complicated as it may seem. The key to understanding the Kijun-sen cross or any trade set-up within Ichimoku Kinko Hyo is "knowing" what you are looking at, and how each of the 5 lines within Ichimoku work with each other, to deliver a clear view of market direction, and thresholds.
For more information conerning the structure of the Ichimoku Charting technique email me direct at
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The Approach The Approach How you approach the trade when dealing with the Kijun-sen Cross Strategy is a critical component of the process. You will find that Hfx deals greatly in the area of Trade Psychology, because of the visual nature of Ichimoku Kinko Hyo. It is overwhelmingly easy for new Traders to try to anticipate the movement of the 5 lines within the Ichimoku Charting System to develop trades that they would "like" to see happen instead of waiting to see what "will" happen. The mantra of Hfx is.. Patience + Discipline = Pips has become a standing rule when executing trades and analysis. and what you will find is that executing a Kijun-sen Cross requires both patience and discipline. Patience + Discipline = Pips This is the approch to a Kijun-sen Cross Execution. Some like to call it a rule, but it is much more than a rule. It is as follows. "I am looking for the price to traverse the Kjun-sen giving me the signal to either "buy" or "sell". Price must "close" above the Kijun-sen before I will establish a position, and not a second before. My exit is dependent upon a predetermined price, and my stop loss is dependent upon the position of the Kijun-sen at all times. I manage my position by always being mindful of the position of the Kijun-sen, and my stop loss moves only when the Kijun-sen moves. Based upon a solid execution the position should yield a max of x pips and a minimum of y pips". In this approach we have what Hfx calls the VCESMR or Visual + Confirmation + Exit Strategy + Stop Loss + Management Rule = Results formula.
VCESMR can also be looked at as the "Trade Management Guide"… VCESMR: Visual + Confirmation + Exit Strategy + Stop Loss + Management Rule = Results With this firmly in mind, we can start looking at the analysis required to configure a successful Kijun-sen Cross trade.
The Analysis The Analysis Configuring an Analysis is the first step in the process of executing a Kijun-sen Cross. Without a solid analysis it is possible that you enter a trade early causing a loss of pips, or late, again causing a loss of pips. "We understand that getting pips is easy, keeping them is the hard part. Conducting analysis should be our first priority, trading or executing the trade is only "icing on the cake" and should be looked at accordingly… The Analiysis of a Kijun-sen Cross is relatively easy. It is made up of the following parts: 1. 2. 3. 4. 5. 6.
Current Price Kijun-sen position Kumo strength Entry Target Exit Target Current Stop Loss (CSL)
Current Price What is the current price? What is the distance of price vs Kijun-sen… Kijun-sen and price have a strange relationship… Price always returns to the Kijun-sen… Kijun-sen Position Where is the Kijun-sen as it relates to the price, above or below? What is the exact position of the Kijun-sen? Kumo Strength What is the sentiment of the prevailing Kumo on the chart being analyzed? Do we have a Bear or Bull Kumo, and where is price in relationship to it?
Entry Target What is my entry target? Where can I get into the trade with as little support and resistance possible? Exit Target What is my position goals, and are they "realistic"? What are the relevant Chikou-span supports and resistance levels? Current Stop Loss Where is the current stop loss, and what is my "risk to reward" ratio?
Optimizing The Position Optimizing the Position At this point you should have already executed the Trade, and you are either "up heavily", or "down slightly" (if you just opened the position)…. Maintaining or Optimizing your position is critical, so that you can lock in your profits. This is best illustrated on a "live chart"…
Exiting The Trade Exiting the Trade. Exiting the trade is more of a psychological issue than it is a technical issue. However; if you have followed the Kijun-sen Cross "fully" the exit is a "natural event" that leaves you in the position to either open another position or "sideline" based on your analysis. Again this is best illustrated on a "live chart"…
