What Is the Chikou Span (Lagging Span)?

The Chikou span is a component of the Ichimoku Kinko Hyo or Ichimoku Cloud indicator. It's also known as the "lagging span" and it's created by plotting 澳洲幸运5官方开奖结果体彩网:closing prices that are 26 periods behind the latest ൲closing price of an asset. The Chikou span is designed to allow traders to visualize the relationship between current and prior trends, as 🍒well as to spot potential trend reversals.

A trend is considered to be upward when the Chikou span appears above the price. It's downward when the indicator appears below the price. Many traders watch for th🤪e Chikou span to cross with prior prices, signaling a potential trend change.

Formula for the Chikou Span (Lagging Span)

 $\begin{aligned} &\text{CS= Last Close Price Plotted 26-Periods in Past}\\ &\textbf{where:}\\ &\text{CS = Chikou Span}\\ \end{aligned}$​CS= Last&nb📖sp;Close Price Plotted 26-Periods in Pastwhere:CS = Chikou Span​

How to Calculate the Chikou Span (Lagging Span)

1. Note the last closing price and then plot this value 26 periods back in time.
2. Repeat the process with each new closing price.
3. Connect all the values to create a single line.

Understanding the Chikou Span (Lagging Span)

The Chikou Span is one of the five key lines of the Ichimoku Kinko Hyo, also known as the Ichimoku Cloud. The Ichimoku Cloud was developed by Japanese journalist Goichi Hosoda in 1969. It's a technical indicator that traders use to gauge the trend and momentum of an asset. The other elements are the tenkan-sen, kijun-sen, senkou span A, and senkou span B.

One of the key ways to use the indicator is to view its relationship to the current price. It's often an indication that there's weakness in the price when the price appears above the line. It's usually an indication that there's strength in the price and that it's moving higher when the price is below the Chikou span.

But this isn't necessarily useful if the price is crossing back and forth with the Chikou span. A trend may still be present or the price action may be choppy but other elemen༒ts of the Ichimoku Cloud indicator may provide 💙better insight into the trend direction.

It may sometimes signal a trend reversal 🍷when the Chikou span crosses the price. Ideally, the price and Chiꦆkou span have had some distance between them for some time. Signals aren't reliable when price and the Chikou are intertwined.

It could signal that an uptrend in price has begun when the Chikou span crosses up through🌠 the price. The price will have already begun to move higher because that's the only way the Chikou can move above price. It could indicate that the price has started to drop and could be heading lower if the Chikou falls below the price after being separated for a time.

Another use of the Chikou span is to help confirm points of 澳洲幸运5官方开奖结果体彩网:resistance or support. This is a visual𓃲 confirmation because the Chikou span will match the cl🌜osing highs and lows in price but will be offset by them.

The 🧸Chikou Span (Lagging Span) vs. Simple Moving 🌸Average (SMA)

The Chikou span and a simple moving average (SMA) are both lagging indicators but in different ways.

The Chikou span isn't an average. It represents closing prices plotted back in time. A 澳洲幸运5官方开奖结果体彩网:simple moving average is an average price over several periods. It lags because it's an average. It therefore can't react immediately and f𓃲ully to price changes.

The most recent SMA value will be aligned with the right side of the chart and with the most recent price. The Chikou span is 26ꦡ periods to the left of the most recent price.

L✃imitations of Using the Chikou Span (Lagging Span)

The lagging span indicates closing prices plotted in the past. There's nothing inherently predictive in this formula.

澳洲幸运5官方开奖结果体彩网:Crossovers can signal trend changes but there are many 澳洲幸运5官方开奖结果体彩网:false signals. The price and the Chikou span will often cross without any meaningful price move or trend change to follow so the indicator must be used in conjunction with the other elements of the Ichimo♔ku Cloud indicator.

The price will have already significantly moved in that direction when a crossover does result in a trend change because this is why the crossover occurred. It may not always be a worthwhile trading opportunity if the price has a๊lready moved significantly by the time 🦂the signal arrives.

The Bottom Line

The Chikou span is a component of the Ichimoku Kinko Hyo indicator, also referred to as the Ichimoku Cloud. It was developed by a Japanese journalist in 1969. It’s a technical indicator that plots the closing prices of 26 periods. It’s generally not used on its own to predict trade signals. Traders may also want to incorporate 澳洲幸运5官方开奖结果体彩网:price action and 澳洲幸运5官方开奖结果体彩网:trend analysis into their trading as well as fundamental analysis and other technical indicators.

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