What is the baseline or Kijun line?
The Ichimoku Cloud indicator consists of five parts, one of which is the Kijun Line, also known as the Base Line or Kijun-sen. Usually, the Conversion Line (Tenkan-sen) and the Kijun Line are utilized together to provide trading signals when they cross. These signals can be further sifted using the other elements of the Ichimoku indicator.
The midway point between the price’s peak and low during the previous 26 periods is the Kijun Line.
What Does the Line of Kijun Mean?
A component of the Ichimoku Cloud indicator is the Kijun Line, often called the Base Line.
A technical indicator known as the Ichimoku Cloud can identify support and resistance, gauge momentum, and issue buy and sell recommendations. Goichi Hosoda, the indicator’s creator, intended it to be a “one-look equilibrium chart.”
The Ichimoku Cloud indication consists of multiple distinct lines.
- Tenkan-Sen: The Conversion Path
- Bottom Line: Kijun-Sen
- Span A, Senkou—The Leading Span
- The Leading Span B of Senkou Span
- Chikou Span: The Lag Span
The Ichimoku Cloud indicator’s most noticeable component is the “cloud,” which is composed of Leading Span A and B. However, trade indications are produced when the Tenkan Line crosses the Kijun Line. The price midpoint for nine periods is known as the Tenkan Line. Because it looks at 26 periods, it travels faster than the Kinjun line.
Considering the Tenkan Line crossing over the Kijun Line as a buy signal, it is possible since it indicates that the short-term price momentum is upward.
A sell signal may be indicated when the Tenkan Line crosses below the Kijun Line, indicating a shift in market momentum to the downside.
The other elements of the Ichimoku indicator should be considered when utilizing buy or sell signals. For instance, only when the price is above Leading Span A or the “cloud,” would a trader want to execute the buy signals.
Reliable trading signals are not produced by the Tenkan Line and Kijun Line crossing back and forth since this indicates no clear pattern in the price movement or that it is moving erratically.
The Kijun Line can be utilized independently for price momentum analysis. When the price is above the Kijun line, it indicates an upward bias and is above the 26-period mid-point. A downward bias is present if the price is below the midpoint price, which the Kijun Line indicates.
What Separates a Moving Average from the Kijun Line
Based on the highs and lows over a predetermined number of periods, the Kijun Line is a moving midpoint. To compute it, multiply the result by two and add the high and low values. The moving average (MA) is not the same. Add up the closing prices over a predetermined number of periods, then divide the total by the number of periods. The information traders receive from a 26-period Kijun Line and a 26-period MA will differ due to their respective periods.
Utilizing the Kijun Line Has Its Limitations
The Kijun Line typically shows up close to the price, barring a mighty trend. It is less helpful in determining the trend direction when the Kijun Line frequently crosses the price or is close to it.
Likewise, this applies to Tenkan Line crossovers. Crossover signals can be advantageous when the price is trending strongly. However, if the price does not continue to trend after the crossover, many crossover signals will be unprofitable.
Given that it displays price history, the Kijun Line is reactive. The indicator’s computation does not contain any predictive elements.
The best way to use the Kijun Line is to combine it with the other components of the Ichimoku Cloud indicator, price movement, and additional technical indicators.
Conclusion
- If the price is above the Kijun Line, it means that prices have been moving up lately. If the price is below the Kijun Line, it means prices have been decreasing recently.
- The Kijun Line and the Tenkan Line send trade messages when used together.
- The baseline is the price in the middle of the last 26 times.
- One of the five parts of the Ichimoku sign is the Kijun Line.
