Friday, October 8, 2010

“Border Line” Pattern for the “Border Line” Pattern for the IchimokuIchimokuKinko Kinko HyoHyo (Candlestick Chart)(Candlestick Chart)

IFTA 23rd Annual Conference

11

-- Positioning with 26 Base Lines and Timing for Positioning with 26 Base Lines and Timing for TimeTime--Based Loss CuttingBased Loss Cutting--

Yukitoshi Higashino, MFTA

Five Factors of the Ichimoku Kinko Hyo (hereinafter Candlestick Chart)

1050

1100

1150

1200

1250

S&P500 (daily chart: June 2009 to August 2010)

Conversion line, base line, leading span 1, leading span 2, and lagging span are the five factors of the candlestick chart, and a chart showing those five factors is the “kinko hyo” (equilibrium chart).

April 26

1219.80Conversion line Leading span 1

(P)

Aug. 9

1129.24

2222

800

850

900

950

1000

2009/6

2009/6

2009/7

2009/8

2009/9

2009/10

2009/11

2009/12

2010/1

2010/2

2010/3

2010/4

2010/5

2010/6

2010/7

2010/8

2010/9

2010/9

Base line

Leading span 2

Feb. 5

1044.50

July 8

869.32

July 1

1010.91

Lagging span

Ideal Top and Bottom Pattern in a Candlestick Chart

26

Double bottom Double top

c d

3333

The ideal period from a low price “a” to “b” and from a high price “c” to “d” is within 26 days.

Why?

26a b

Bottom Pattern Shifting from Fall to Rise

26

○

×

Within 26 days from the expected low "a," the price goes above “a” to “b” before turning upwards.

Within 26 days from the expected low "a," the price goes

Ⅰ

Ⅱ

a b

Stock price

4444

26

26

×

△

expected low "a," the price goes below "a" to "b" before turning upwards.

Starting from the expected low "a," the price falls to "b" which is higher than “a” and then rises, but in a period that exceeds 26 days.

Ⅱ

Ⅲ

a

a b

b

Ceiling Pattern for Shifting from Rise to Fall

26

26

○

×

The price goes to lower “d” than the expected high "c" within 26 days and then goes down.

The price goes to the higher “d” than the expected high "c" within

Ⅰ

Ⅱ

c d

d

c

5555

26

×

△

than the expected high "c" within 26 days and then goes down.

The price does not exceed the expected high "c" and goes down after hitting "d" but in a period of over 26 days from "c."

Ⅱ

Ⅲ

dc

Base line: the middle price between the highest and lowest price in the past 26 days including the current day (highest price in a period of 26 days + lowest price

Important Points in Base line and Lagging Span

・ “Border line” - The ideal top-bottom pattern that introduces the daily change concept of “26 days” from the base line to the lagging span.

6666

lowest price in the past 26 days including the current day (highest price in a period of 26 days + lowest price in a period of 26 days) ÷2

Lagging span: current day’s closing price projected into the past by 26 days including the current day

What is the “Base Line”?

6000

6200

6400

6600

DAX and base line (daily chart: March 2010 to August 2010)

26 daysApril 26

6341.52

7777

5400

5600

5800

6000

2010/3

2010/3

2010/4

2010/5

2010/6

2010/7

2010/8

2010/9

2010/10

* “26” used here is the important basic value in the concept of the kinko hyo (candlestick chart).

Base line = (highest + lowest in the past 26 days)/2On the following day, the same calculation is conducted by including the prices of the new day but excluding the prices of the oldest day in the base line calculation period.

May 25

5607.68

July 5

5809.37

What is the “Lagging Span”?

2800

3000

3200

SX5E and lagging span (daily chart: May 2009 to August 2010)

Upturn

DownturnDownturn

Nov. 3

Jan. 11

3044.37April 16

3027.14

Aug. 5

2849.45

8888

2000

2200

2400

2600

2009/5

2009/6

2009/7

2009/8

2009/9

2009/10

2009/11

2009/12

2010/1

2010/2

2010/3

2010/3

2010/4

2010/5

2010/6

2010/7

2010/8

2010/9

2010/10

* “26” used here is the important basic value in the concept of the kinko hyo (candlestick chart).

Feb. 8

2617.77Upturn May 25

2448.10

Nov. 3

2693.80

A line connecting daily values in the past 26 days including today’s closing

26

○

・Base line: (highest in 26 days + lowest in 26 days) ÷2

What the “base line” means in the border line.

When the price makes an upturn within 26 days from the expected low "a," the base line goes up in 26 days from the expected low "a," and therefore stock prices tend to go up.

Ⅰ

When the price goes below the expected low "a" within 26 days from

a

Stock price

Base line

b

9999

26

26

×

△

Ⅱ

Ⅲ

expected low "a" within 26 days from "a," the base line cannot go up and provides resistance to the increase in stock prices, which increases the possibility of the price going down.

When the price does not go down below the expected low "a" and makes an upturn after a period of 26 days, the base line moves sideways and then drops to become resistant to the rising of stock prices.

a

a

b

b

When a dip to "b" is strong relative to the expected low "a," the leveling period of the base line tends to be extended. In that period, if the stock price does not go back up and exceed the high, the high of the base line during the calculation period becomes lower, thereby causing the base line to drop again.

The softer the downtrend, the stronger the market (base line). Why is that?

Ⅰ

Stock price

Base line

10101010

26

26

When a dip to "b" is weak relative to the expected low "a," it is relatively more likely that the price will go up above the recovery high. Therefore, the high of the base line during the calculation period go higher, and the uptrend of the base line continues, making it likely to create a stronger market.

line to drop again.a

a

b

b

Ⅱ

26

What the “lagging span” means in the border line.

・Lagging span: current day’s daily closing price projected into the past by 26 days

When the price makes an upturn within 26 days from the expected low "a" after hitting "b," then the lagging span exceeds the stock price. (upturn or buy signal).

a

Ⅰ ○

When the price hits "b," which is lower than the expected low "a" within 26 days from "a," then the

Stock price

Lagging span

b

11111111

26

When the price does not go down below the expected low "a" but takes an upturn after hitting "b" in a period of over 26 days from "a," the lagging span is highly likely to go down below the stock price again. (downturn after upturn, sell signal).

Ⅱ

a

26

Ⅲ

a

×

△

within 26 days from "a," then the lagging span remains below the stock price. (continued downturn or sell signal).

b

b

When the dip to "b" is strong relative to the expected low "a," the lagging span tends to touch the stock price of 26 days ago and thus is more likely to fall below the stock price. There is a high possibility of becoming a downturn.

The softer the downtrend, the stronger the market (lagging span). Why is that?

Ⅰ

Stock price

Lagging span

12121212

26

26

When the dip to "b" is soft relative to the expected low "a," the lagging span tends not to touch the stock price of 26 days ago and is thus relatively less likely to fall below the stock price. There is a low possibility of becoming a downturn.

a

a

Ⅱ

b

b

Basic Pattern for the Border Line

・ The border line is composed of the ideal patterns of the lagging line and the base line.

26Stock price

△△

An ideal case is that the line does not go down below the base line and makes an upturn in about 26 days from the second lowest bottom.

△△

13131313

26

26

Stock price

Lagging span

Base line 26

▽▽

An ideal case is that the line does not go up above the base line but drops again about 26 days from the second highest peak.

▽▽

a b

c d

・ The value goes above or falls below the recovery high or the immediate low within 26 days.

26

The Strong Border Line Pattern and the Temporal Loss Cut

26

△△

Stock price

▽▽

The base line continues to rise, and the stock price shows a strong up trend.

△△△△

14141414

2626

26

26

26

Stock price

Lagging span

Base line

▽▽ Loss cutting due to the fall of the base line

The base line continues to fall, and the stock price shows a strong down trend.

△△ Loss cutting due to the rise of the base line

▽

△△

▽▽

▽▽

a

c

b

d

＝

＝

＝

＝

3E

＝

＝

＝

＝

3E

E Calculation after the Border Line (Setting of the Target)

1000

950

900E

850

800

50

600

650

700

800

50

E

26

26

750

15151515

A rise from the second lowest bottom or a drop from the second highest peak is often accompanied by a gap.

Double of the increment or decrement of the initial move becomes an equilibrium point.

Equivalent

42

65

76・ Basic values

26

Equilibrium Point is the Arrangement of the Lateral Axis and Vertical Axis.

＝

＝

＝

＝

＝

Stock price

No. of days

(9, 17, 26, 33, 42, 51, 65, 76,

Equilibrium point (important change day)

83, 97, 101, 129…)

16161616

88

81

168 (53+29+88-2)

53

116

29

・ Equivalentvalues

168

53

②

①

③

④② 53+29-1

③ 29+88-1

④ 53+29+88-2

26

＝

＝

＝

＝

Stock price

No. of days

Equilibrium point (important change day)

＝

Time Theory (Concept of Equivalent Value)

= == = = =

17171717

I I ＝＝ II

V V ＝＝ II

N N ＝＝ II

I I ＝＝ VV

VV ＝＝ VV

N N ＝＝ VV

I I ＝＝ NN

V V ＝＝ NN

N N ＝＝ NN

Itochu Corp. (8001, daily chart)January 2003 to November 2003

65 64

52

39

348351

347

18181818

26

39

39●●

Low within 26 days

26

△△

△△

Nomura Holdings, Inc. (8604、daily chart)November 2002 to September 2003

179

179

89 90

18031800

19191919

26

179

179

179

●●

△△

26

Marubeni Corp. (8002、daily chart)

March 2008 to March 200926

102

102

102

102

●●

High within 26 days

20202020

129

102

102

102

102

274260

140

160

180

200

AAPL UW (daily chart、Feb. 2008 to April 2009)

19.73

May 14, 2008

192.24

48

152.78 152.91

($)

●●

48

19.73

19.73

19.73

February 2008 to April 2009

21212121

60

80

100

120

08/2/1

08/3/3

08/4/1

08/4/29

08/5/28

08/6/25

08/7/24

08/8/21

08/9/19

08/10/17

08/11/14

08/12/15

09/1/14

09/2/12

09/3/13

09/4/10

09/4/30

173Jan. 20, 2009

78.20

Sept. 18, 2008

120.70

19.73

19.73

73.8619.73

1092

1632

1626

1079 1095

151150(08.3.24)

270

270

45 46

77

Sumitomo Metal Mining （5713、 daily chart ）

2222

26

270

1092 1079 1095

270

August 2008 to July 2009

26

Sumitomo Metal Mining （5713、 daily chart ）

May 2010 to September 2010

2323

2626

NTT DOCOMO（9437、 daily chart ）

26 26

October 2009 to August 2010

2424

26

26

40

50

60

70October 2008 to September 2010

Deutsche Bank （ daily chart ）

2009.7.27

52.60

2010.4.1560.55

2009.10.15

58.29

2009.6.5

49.6249.78

8.6

8.6

58.37

€

2525

10

20

30

40

08/10

08/11

08/12

09/2

09/3

09/5

09/6

09/8

09/9

09/10

09/12

10/1

10/3

10/4

10/6

10/7

10/8

10/10

8.6

952009.1.21

15.38

●●

8.6

8.6

189

35

37

39

41

43

SAP（ daily chart ）

●●

2007.9.21

42.08

1.97

1.97

1.97

1.97

€August 2007 to Match 2008

2626

27

29

31

33

35

07/8

07/8

07/8

07/9

07/9

07/10

07/10

07/11

07/11

07/12

07/12

08/1

08/1

08/2

08/2

08/3

08/3

832008.1.22

28.31

1.97

1.97

1.97

1.9728.29

Nomura Holdings, Inc. (8604、daily chart)

March 2010 to September 2010

2727

26

26

▽▽

March 2010 to September 2010

Mizuho Financial Group（8411、daily chart ）

2828

26

26

▽▽

This report is intended to provide information that helps the user to make proper investment judgments and does not aim to promote particular investments.

The data contained in this report are based on reliable information, but we do not guarantee the correctness or integrity of the data.

The information contained in this report is meant for your own use. It

Caution

29292929

The information contained in this report is meant for your own use. It is prohibited for this report to be provided or redistributed to any third person, or modified or changed in any way. It is also prohibited that copies or modified versions of this report be assigned or transferred to or used by any third person.

T&C Financial Research,Inc.

Yukitoshi Higashino

y_higashino@tandcfr.com