Ichimoku arithmetic - the three basic pillars

More than 95% of traders, trade teachers, analysts all consider the above 5 lines as the fundamental element of Ichimoku.  But actually that is not true.  Ichimoku's campus consists of 3 main pillars listed below:  

  • Ichimoku arithmetic theory.
  • Ichimoku Wave Theory.
  • Ichimoku Price Theory.

These are the three main pillars that form the basis of Ichimoku, but the roots of these three pillars all come from Ichimoku's arithmetic theory.

Goichi Hosada (the founder of Ichimoku) has spent more than 4 years researching and developing Ichimoku based on arithmetic theory.  He studied many theories from East to West and ended up coming to terms with the three numbers that he considered the most important to Ichimoku.  You probably already know about those 3 numbers: that is, 9, 17, and 26. This is why the Kijun Sen line was set to cycle 26, number 26 related to the work of Goichi's own, no.  This involves 6 trading days a week according to Japanese financial markets (and a lot of traders misunderstand this matter).  This means that no matter what timeframe you are using to trade, the settings of Ichimoku's parameters should be kept intact.

Ichimoku arithmetic - the 10-number rule

You already know there are 3 most important numbers in Ichimoku, but Ichimoku's system has 10 numbers in all, including the following numbers:
  •  9 -17 - 26 are the 3 most important numbers.
  • Other numbers include: 33 - 42 - 65 - 76 - 129 -172 - 200 - 257
 Now you can try a calculation like this:
  •  9 + 17 gives 26.
  •  Take 26 + 17 = 42 +1
  • Take 33 + 9 = 42.
  • Take 33 x 2 = 65 +1
  • Take 42 + 33 = 76 - 1
  •  Take 65 × 2 = 129 + 1.
  • Take 129 + 42 = 172-1.
 As such, all these numbers are closely related.

Apply Ichimoku arithmetic in practice

Ideally, Traders should use arithmetic theory in conjunction with the other 2 Ichimoku pillars of price theory and wave theory.  However, due to the limitation of the article, temporarily just state the most basic application of the theory to find the reversal point.  The easiest example is that you will see price action often reacting very strongly to Ichimoku's numbers.  Of course, Ichimoku arithmetic isn't the holy grail that helps you spot reversals early, it just tells you that you should look out for price zones that are likely to reverse high.  In the market, it is more important to foresee an event than to forecast it (because forecasts are often wrong, and forecasts give you a lot of scenarios to prepare).

An example with the AUDUSD chart daily, here you observe.
  •  AB = 41 (move 41 candles before reversing)
  • BC = 16 (16 previous candles reversed)
  • CD = 26 candles.
  • DE = 18 candles (17 + 1)
  • EF = 26 candles.
 This is just a small example so it may not be accurate if you observe many different charts, so please see this as a reference first.  Some interesting information you can refer to when applying Ichimoku such as JPY pairs often react more strongly to Ichimoku than other pairs, perhaps because many Japanese Traders use Ichimoku in Trading?

In short, although it's just an introduction to Ichimoku, I want you to know that Ichimoku is not the theory of 5 basic lines (Kijun Sen, Tenkan Sen ...) it is a solid theory built on  Number theory, price theory, and wave theory.  Ichimoku is itself a system and an independent method, with no need to combine with other methods.  Goichi Hosada once said of this in the mid-80s: "Of the 10,000 people who use Ichimoku, maybe only 10 actually understand Ichimoku."