As we read in the last article, How to use Ichimoku Cloud in Forex, Ichimoku cloud is an excellent indicator for JPY pairs and some traders. But there is an interesting question. What are the best Ichimoku indicator settings?
As we know, below are the main Ichimoku components:
So we want to test two primary Ichimoku settings, 7,22,44 and 9,26,52. How can we do that?
What did we find out when we compared different Ichimoku settings? :
The Ichimoku cloud indicator was created to simultaneously show support and resistance, trend direction, and momentum on the chart. The Tenkan and Kijun Sens lines from the Ichimoku indicator are used as a moving average crossover signal and indicate a trend change. The Ichimoku “cloud” represents current and historical price action and defines the current trend (above the cloud is the rising trend and below is the downtrend).
Default Ichimoku settings are 9 for the Conversion Line ( Tenkan-sen), 26 for the Base Line (Kyun-sen ), and 52 for the Leading Span B (Senkou Span B). It is several percent better in testing than Ichimoku settings 7 22 44 (Tenkan-sen is 7, Kyun-sen is 22, and Senkou Span B is 44 ). We tested these two most commonly used settings on the Daily chart for the last 22 years. The use of significant pairs, EURJPY, GBPJPY, AUDJPY, USDJPY, and NZDJPY.
Let us see the Ichimoku cloud strategy based on rules for long and short trade:
- BUY If the default red Tenkan Sen line crosses above the default blue Kijun sen line and both lines, the price is above the cloud on Daily Chart.
- SELL if the Red Tenkan Sen line crosses below the Blue line while the price and both lines are found under the cloud.
- Stop-loss set to be on 1 Daily Average true range for the last 14 days.
- Target set to be on 1 Daily Average true range for the last 14 days.
After testing, almost 4% of results are better-using default settings 9,26,52.
What are the best Ichimoku settings for forex?
The best Ichimoku setting for trading is 9-26-52. The default Ichimoku settings of 9-26-52 for forex trading showed the best results in the case study. Of course, Ichimoku settings can be adjusted to suit a 5-day week at 7-22-44, then 9-30-60, or 12-24-120 for trending markets.
What are the best settings for Ichimoku 5 min chart?
The best settings for Ichimoku 5 min chart is standard default settings 9-26-52, where 9 is for the Conversion Line ( Tenkan-sen), 26 for the Base Line (Kyun-sen ), and 52 for the Leading Span B (Senkou Span B).
In our case study, there is no statistical evidence of which setting is better because the results were very close. However, we saw that performance was worse on the 5-minute chart than H4 or daily. Hence, we suggest using the Ichimoku indicator on H4, daily, and weekly charts.
What are the best Ichimoku settings for the 1-minute chart?
The best Ichimoku settings for scalping and 1-minute chart are 12-24-120, where 12 is for the Conversion Line ( Tenkan-sen), 24 for the Base Line (Kyun-sen ), and 120 for the Leading Span B (Senkou Span B).
Our case study saw a few percent better results for 12-24-120 settings than standard 9-26-52. This result can be in a larger time frame that settings 12-24-120 occur. We noticed that with a larger time frame, performance is better. The best performance Ichimoku cloud has for H4, Daily, weekly, and monthly time frame.