The Kijun sen is one of the most “hardest working” lines in ichimoku, it just keeps giving us vital clues almost constantly throughout the day, this is why without a doubt, its my favourite part of ichimoku indicator.
Just like its brother, the ‘tenken sen’, the Kijun Sen measures the average of price’s highest high and lowest low, however it does this over a longer time frame of 26 periods as opposed to the tenkan sen’s 9 periods.
The Kijun Sen provides us with all the information the Tenken Sen does, just on a longer time frame.
Because the Kijun Sen measures the longer time period, it is more reliable when it comes to measuring short term price setiment and strength then that of the Tenkan Sen.
If price has been ranging, then the Kijun Sen will flatten out
This is a great tool to use when your deciding whether to stay out of a trade or not. If price has been trading between the most recent highest highs and lowest lows and has not really decided on a direction (ranging) then the Kijun tells us to not to trade by flattening out.
The good news is, the Kijun Sen tells us when we can start to look for signals again, by angling either up or down, this means the short term trend can be measured by the direction of the Kijun Sen.
Also the angle of the Kijun Sen can show us the strength and momentum of trend,
the greater the angle the stronger the trend.
Let me show you an example.
Another aspect that is expressed more accurately in the Kijun Sen then that in the Tenken Sen is price equilibrium, this is because of the longer time period the Kijun Sen considers.
Because of this, we can heavily rely on the Kijun Sen to show us significant levels of support and resistance.
The elastic band effect
Because the Kijun Sen has such a strong expression of equilibrium, price tends to move away and back towards the Kijun Sen. This is most noticeable when price momentum is extreme and price is moving up and down rapidly over a short period of time.
Some traders call this the ‘rubber band effect‘, this is where the Kijun Sen attracts price towards itself bringing it back to the equilibrium, its like the Kijun Sen is a strong magnet and price is always attracted back to it.
This happens most when the Kijun is flat or trendless as seen below.
As you can see from the chart above, price starts to move away from the Kijun Sen but soon changes direction and pulls back towards the flattened Kijun Sen.
Because of these different dynamics, the Kijun Sen can not only be used as a low risk entry point but also as a solid stop loss.
You will see in future posts how we can utilise the power of the Kijun Sen and create some highly profitable strategies and methods, but for now I will end the lessons here.