Chikou Span (Lagging Span)

christ

Hello,
I like to use the Ichimoku Clouds indicator but I don't know what the use of the Chikou Span (Lagging Span) is.
Is there someone around who could kindly explain what the Chikou Span is designed for and how to make a use of it in making a decision?
Thank you in advance.
Chris

Kevo

It seems strange that the ChartSchool article elects not to discuss this.

The trend is up if the Chikou span is above prices. The trend is down if below prices. There is more momentum the further away the Chikou span is from price. If the Chikou span is in the candlesticks, then there is less momentum. Watch for Chikou crossing price because if it crosses down, then this signals exhaustion or a pullback.

All of this I found here: http://ichimokutrading.com/the-chikou-span/


The Chikou span reminds me of the Detrended Price Oscillator (DPO), which plots a moving average shifted back in time. The DPO measures cycles, and the trend is removed from DPO. It looks like the Chikou span does nothing at all similar to DPO.

Kevo

That is a great website. Thanks for sharing the link. I learned a lot.

There is a small problem with what you are saying. It is easy to get confused. I found that understanding these things takes time and effort.

When using an indicator like Chikou, you want to compare the indicator with price. Not today's price compared with price 26 periods ago.

Here is a solution that I found:
1. Locate the last data point of the green Chikou line (26 periods ago from today's price).
2. Draw an imaginary vertical line through that point such that it intersects price.
3. If the Chikou is above the price, on the vertical line, then it is a bullish sign.
4. The further away the Chikou is from price, on the vertical line, suggests momentum.
5. The vertical line is drawn 26 periods ago from today's price.
6. A tenet of Ichimoku is to not use one component alone. It must be used in combination with the other components.

This also answers the question I posed above.

christ

Yes, the question was answered, mainly thanks to the link provided (http://ichimokutrading.com/the-chikou-span/).

What was unclear to me (since the present Chikou span is always at the same level as the close of the present price, but charts always fail to show examples of present Chikou spans) was "Which prices are you are referring to when you say 'the Chikou is above (or under) prices': are you talking about the present prices or about the 26 period-back prices?"

Now the answer is clear: the trend is up if the present Chikou span is above the 26 period-back prices, and the trend is down if the present Chikou span is below the 26 period-back prices.

Thanks again.

Kevo

I think there might be some confusion about the Chikou span. By definition, the Chikou span is the present day closing price plotted 26 periods back in time in the past (shifted to the left). So, looking at the Ichimoku chart, the Chikou span will always be 26 periods behind the current period price. Now, look to see if it is above/below/or in the candlesticks (26 periods behind current price). The further away from price, the more momentum.

The link above also says the definition correctly, but the chart image appears to show a non-shifted Chikou span, or as you call it a "present day" Chikou span. I believe this is incorrect. The link above also says the Chikou span is green, but the chart image shows a gold Chikou span, which is another clue that something is awry with their chart.

I believe there is no such thing as a "present day" Chikou span. It is always shifted to the left like 26 periods.

(*) (*) You bring up a good question: When looking at the Chikou span (plotted 26 periods in the past), do you compare the Chikou span to the current day's price, or the price 26 periods back in time? This is a very good question. I believe you compare it to the price 26 periods ago. Ha! Will an expert please comment on this.

Kevo

The chart image in the link above does show a Chikou span plotted back in time, but it should stop at the blue arrow. It keeps going to the current price, which appears to be some kind of error.

christ

Well, I went back to this website (http://www.kumotrader.com/ichimoku_wiki/index.php?title=Main_Page) in order to re-read the Chikou span section, and I think now I get a better understanding of the two prices to compare (i.e., I have to compare today's current price with the 26 period-back price and see whether it is above, below or at the same level as today's current price). Right?

christ

Thank you, Kevo, for following up with me.

Now, my next question would be, is there any StockCharts' function providing (and ranking) scans of stocks/etfs/indices based on Ichimoku weekly charts? If yes, where can I find (or how can I learn to use) this function?

Kevo

Here is a weekly scan of the four major bullish signals:

[type = stock] and [Country = US] and [Daily SMA(20,Daily Volume) > 50000] and [Daily SMA(20,Daily Close) > 10]

# Optional large cap filter
#and [market cap > 10000]

#1: Most traditional strategy. This is the strong bullish case occurring above cloud. Use Chikou span for confirmation.
and [[[Weekly Ichimoku Conversion Line(9,26,52) x Weekly Ichimoku Base Line(9,26,52)] and [Weekly Ichimoku Base Line(9,26,52) > Weekly Ichimoku Span A(9,26,52)] and [Weekly Ichimoku Span A(9,26,52) > Weekly Ichimoku Span B(9,26,52)]]

#2: Powerful and reliable strategy. Best on large (weekly) time frames. Strong bullish case occurring above cloud. Use Chikou span for confirmation.
or [[today's Weekly Close x Weekly Ichimoku Base Line(9,26,52)] and [Weekly Ichimoku Base Line(9,26,52) > Weekly Ichimoku Span A(9,26,52)] and [Weekly Ichimoku Span A(9,26,52) > Weekly Ichimoku Span B(9,26,52)]]

#3: Bullish cloud breakout. Best on larger (weekly) time frame. Requires longer hold time. Care needs to be taken. No established strong case.
or [[today's Weekly Close x Weekly Ichimoku Span A(9,26,52)] and [Weekly Ichimoku Conversion Line(9,26,52) > Weekly Ichimoku Base Line(9,26,52)] and [Weekly Ichimoku Span A(9,26,52) > Weekly Ichimoku Span B(9,26,52)]]

#4: Lesser known strategy. Trend trading. Start of green cloud. Best on longer (weekly) time frames. Longer holding period. Strong bullish case.
or [[Weekly Ichimoku Span A(9,26,52) x Weekly Ichimoku Span B(9,26,52)] and [today's Weekly Close > Weekly Ichimoku Span A(9,26,52)] and [Weekly Ichimoku Conversion Line(9,26,52) > Weekly Ichimoku Base Line(9,26,52)]]]

Rank By Weekly ROC(10)




-------
Notes:
a. Please be advised that I have not fully tested this.
b. I saved this scan, and plan to paper trade it over the next couple months to see how well it works.
c. This was a good exercise. Thanks. I am glad to have it in the tool chest.
d. All four major strategies are in the scan. So all four return results. In the results, I would figure out which strategy triggered since some need more care than others.
e. These are the bullish strategies only. Bearish scans are not in this.
f. I am trying to scan for the strong bullish case of all four by adding criteria behind each crossover criteria. This is the best I could think of. If anyone has ideas or tweaks for improving the strong case, please post them here.
g. The comments in the scan are one liners and should be helpful.
h. SCC does not support Chikou span scans, so it is best to use as visual confirmation.
i. I arbitrarily picked the 10 week ROC to rank by.

AirborneTrader

There's a definitive book on Ichimoku: Cloud Charts by David Linton. It's a good book!
http://www.amazon.com/Cloud-Charts-Trading-Ichimoku-Technique/dp/0956517102/ref=sr_1_1?ie=UTF8&qid=1411336259&sr=8-1&keywords=cloud+charts

christ

I guess you both answered my question. Thank you.

Please note that I'd also appreciate being informed on the way how to scan bearish signals (converting " > " into " < " might not be enough...??).

chris84

The link provided in the answer is dead... For anyone ending up here like me here is an article that explains how to use the Chikou span: https://www.altcointrading.net/ichimoku-cloud/