Using the Ladder with Ichimoku Kinko Hyo

Ichimoku Kinko Hyo, usually just “Ichimoku”, looks like the most complicated indicator on the chart: five lines and a shaded cloud. But its main lines are made of one simple thing, the middle of a recent high and low. That is the C of a box. This lesson shows how to see those lines as boxes, how to put the ladder around them, and how to read them against the boxes the book already uses.

What you will be able to do

• Say which Ichimoku lines are the C of a box, and over how many bars.
• Explain why a rolling box has to be frozen before you read its edges.
• Draw the ladder on a frozen nine-bar box and find where price sits in it.
• Combine the locked box’s bias with the Ichimoku line to name the reading: aligned, pullback or recovery.
• Say what would confirm the reading and what would break it.

The lines are boxes

Ichimoku is built from three midpoints. Each one is the highest high plus the lowest low of the last N bars, divided by two: