Daily data and mid prices

Daily data is the standard frequency

Although traditional candle theory looks at hourly, daily, weekly or monthly charts, just as we do with bar charts, with Ichimoku charts only daily charts are used. Having said that, some chartists bend the rules and use monthly, weekly or hourly units of time – the lesson being: never be afraid to experiment. The fact that daily candlesticks are used means that the system is for medium to long term strategies, and is therefore not suitable for jobbers and day traders.

Mid-point prices used

We now start moving into new territory! Ichimoku charts differ fromWestern ones in that they are not drawn using daily closing prices. Instead, ‘mid-prices’ are used. This method takes the average of the high and low price of the day (simply adding the high and low price and dividing by two). The mid-price calculation is not adjusted for volume. This is a good method for markets where there is an arbitrary cut-off time, such as FX which is a global 24 hour market, or for small markets that are subject to manipulation at settlement time.