Kijun-Sen (Base Line)
Candlefocus EditorThe Kijun-Sen is typically used in conjunction with the Tenkan-Sen, an indicator made up of a 9-period midpoint price, in order to generate trading signals. When the price is above the Kijun-Sen, it usually means that the short- to medium-term price momentum is up. Conversely, when the price is below the Kijun-Sen, the price momentum is usually down.
Traders typically observe a “death cross” phenomenon when the Tenkan-Sen crosses the Kijun-Sen from above. This usually signals a potential downward trend in the stock or currency pair, suggesting that the market is selling off and that traders should exit positions. A “golden cross” occurs when the Tenkan-Sen crosses the Kijun-Sen from below, indicating that the market is becoming more bullish and that traders should enter into positions.
The Kijun-Sen is also used for some of the more sophisticated Ichimoku strategies, such as the Ichimoku Kumo Breakout, the Ichimoku Twist, and the Kijun-Sen/Tenkan-Sen Cross. Each of these strategies takes into account the interplay between the Tenkan-Sen and Kijun-Sen to produce trade signals that could be used by forex and stock traders alike.
In conclusion, the Kijun-Sen, or Base Line, is an integral part of the Ichimoku Kinko Hyo system. It is used by market traders to generate trade signals when it interacts with other Ichimoku indicators. When the price is above the Kijun-Sen, traders should enter into positions and take advantage of the bullish momentum. Conversely, when the price falls below the Kijun-Sen, traders should exit their positions and avoid the bearish trend in the market.