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An ichimoku chart consists of:

1 The standard line,
2 The turning line,
3 The delayed line,
4 The first preceding span, and
5 The second preceding span.

Today’s point in the standard line is computed by the formula for the past nine days, including today.

Now write down these computed values in a table or spreadsheet, which in Japanese is called kinkou-hyou (the table of equilibrium prices). Next, in this table record today’s closing price 26 days prior to today. This becomes a point in the delayed line. (See sidebar “Computing ichimoku lines” for details in a spreadsheet.)

The first preceding span is computed using the standard and turning lines by the formula for the past 26 days, including today.

In a similar way, the turning line is computed by the formula FIGURE 1: ICHIMOKU CHART. June gold 2000 jockeys within the confines of lines generated by its own movement. Ichimoku charts are meant to portray the tradable’s position within its expected trading range. The most recent prices are in the cloud, indicating a lack of direction. Tu rning line = Highest high + Lowest low / 2

1st preceding span = Standard line + Turning line / 2

2nd preceding span = Highest high + Lowest low / 2

and the computed value is entered in the same table 26 days ahead of today, counting today.

Finally, the second preceding span is computed from the historical prices as for the past 52 days, including today, and this value is again recorded in the table 26 days ahead of today, counting today. Using a spreadsheet or analytical program, chart these lines along with your pricing (Figure 1).

COMPUTING ICHIMOKU LINES

You should be able to display ichimoku charts in your spreadsheets using formulas similar to these Excel formulas.

First, prepare the data in column format using date, high, low, and close. The open is not used. Then enter the formulas shown in sidebar Figure 1 for columns E, F, G, K, and L. Copy them all down to the end of the data. Column G, the delayed line, will end in a series of zeroes because it looks ahead in the data to see what the values are in the future. This formulation, while unusual to Western eyes, is correct.

Because columns I and J start so far into the data, they aren’t shown on sidebar Figure 1. Instead, enter in cell I52 the following formula for the first preceding span:

=(E27+F27)/2

Copy cell I52 down to the end of the data. Then, in cell J78, enter the following formula for the second preceding span:

=(MAX(B2:B53)+MIN(C2:C53))/2

and copy it down to the end of your data.

Using the charting facility for your spreadsheet, create a multiple data series chart. In Excel, the specifications for the lines (using our gold example with 268 rows of data) are:

Standard line
=SERIES(Gold!$E$1,Gold!$A$2:$A$268,Gold!$E$2:$E$268,1)
Turning line
=SERIES(Gold!$F$1,Gold!$A$2:$A$268,Gold!$F$2:$F$268,2)
Delayed line
=SERIES(Gold!$G$1,Gold!$A$2:$A$268,Gold!$G$2:$G$268,3)
Close
=SERIES(Gold!$D$1,Gold!$A$2:$A$268,Gold!$D$2:$D$268,4)
First preceding span
=SERIES(Gold!$I$1,Gold!$A$2:$A$268,Gold!$I$2:$I$268,5)
Second preceding span
=SERIES(Gold!$J$1,Gold!$A$2:$A$268,Gold!$J$2:$J$268,6)

This model is available for download to STOCKS & COMMODITIES subscribers on the S&C Website at http:// technical.traders.com/sub/sublogin.asp. —K.M.