Conversion line(9d) , also known as the Tenkan Sen or the Turning or , is a moving average of the highest high and lowest low over the last 9 trading days. It is primarily used to measure short-term momentum and is interpreted in the same manner as a short-term moving average.
A steeply angled Tenkan Sen indicates a sharp recent price change or strong momentum, while a flatter Tenkan Sen indicates low or no momentum. The price breaching the Tenkan Sen may give an early indication of a trend change. It had crossed, in the chart, over the base line on 18/10/11 , rose & topped on 09/11/11 and drop down crossing below the base line on 17/11/11.
Base line(26d) , also known as the Kijun Sen or the Standard , is a moving average of the highest high and lowest low over the last 26 trading days. It is primarily used to measure momentum, however because of its longer time period it is a more reliable indicator of trend. A flatter Kijun Sen indicates a range bound price, while an inclined line indicates a trend, with the angle of the line showing the momentum of the trend.
Lagging line (26d) , also known as the Chikou Span, is the closing price plotted 26 trading days behind, i.e. into the past, providing an at-a-glance view of how the price compares to that 26 days ago. It is hardly visible in lower left side.
The trend is deemed to be upward when the Chikou Span is above the closing prices and downward when it is below them. The Chikou Span is also considered of use for confirmation of trends, momentum, and support and resistance levels highlighted by the other Ichimoku elements.
Cloud , also known as the Kumo , is the area between the Senkou Span A and the Senkou Span B, and is at the center of the Ichimoku system. It should be noted that several of the chart elements use the average of the highest high and lowest low over a period, and therefore represent the mid-point of the range of prices over that period. This is considered to provide a better visualisation of trend, momentum, and support and resistance levels than just using an average of closing prices. It should be stressed that no chart element should be considered in isolation; the chart should be viewed as a whole with all elements taken into account, and intepretations should be regarded as probabilistic, rather than predictive.
Senkou Span A, also known as the 1st leading line, is a moving average of the Tenkan Sen and Kijun Sen and is plotted 26 trading days ahead, i.e. into the future.
Senkou Span B, also known as the 2nd leading line, is a moving average of the highest high and lowest low over the last 52 trading days is plotted 26 trading days ahead, i.e. into the future. As such it is the longest term representation of equilibrium in the Ichimoku system.
It is primarily used in combination with the Senkou Span A to form the Kumo (cloud), to indicate probable future support and resistance levels. As price tends to respect prior support and resistance levels, time-shifting this line forward gives a visual representation of how the price on a date relates to support and resistance from 52 trading days prior.
The trend is deemed to be bearish when the Senkou Span A is below the Senkou Span B and bullish when it is above. As price tends to respect prior support and resistance levels, time-shifting this line forward gives a visual representation of how the price on a date relates to support and resistance from 26 trading days prior.
The Kumo is primarily used to indicate probable future support and resistance levels, with the top of the Kumo indicating the first level of support and the bottom the second level when the price is above the Kumo. Conversely, the bottom of the Kumo indicates the first level of resistance and the top the second level when the price is below the Kumo.
A price above the Kumo indicates a bullish trend and a price below indicates a bearish one, while price within the Kumo indicates a potentially trend-less or range-bound situation.
The thickness of the Kumo shows the level of historical volatility, as well as the strength of support or resistance. A thicker Kumo shows a greater the level of historical volatility and support or resistance, and vice-versa.
Cloud beyond the span starting from 25/11/11 is the probabilistic view of future Nifty.
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