Forex Technical Analysis: Basics - Part 4 | Vantage FX UK

Vantage FX (http://www.vantagefx.co.uk) looks at different chart types and what traders can decipher from them.

Ichimoku Cloud

Each candlestick on this chart illustrates the price movement of each time-period, in this case an hour. The pale green line is a line chart of today's closing price, plotted 26 days ago. The 9-day moving average is based on the mid-point of the day, this is in purple.

The black line shows the 26-day moving average, based on an average of the highest and lowest. The cloud is a combination of the 26-day moving average plotted forward in time,

By using a combination of candlesticks, line charts and moving averages you are able to build the Ichimoku cloud.This formation allows you to understand where the intermediate trend lies.