Price Targets

From the N Wave consolidation patterns, Price Targets are determined. Again, this should be straight-forward, as it uses measurements of the size of the whole pattern and the size of each of the waves within it.As inWestern technical analysis, the height of the triangle gives a target price for when we break out of the pattern. Similarly a head-and-shoulders pattern gives a price target and ElliottWave theory states that wave C will be in proportion to wave A lower.

Ichimoku targets can only cope with the size of the very next little wave. Each consolidation pattern suggests the direction of the very next move only. It does not predict the next series of waves and long term targets as ElliottWave can do. So, one step at a time here.
The Price Targets are labelled V, N, E, and NT. The first two are self-evident - being the final leg of their respective formations. E may have stemmed from the fact the pattern has two equal halves, where the last leg compensates for the dip to C, but this is unclear. I can only imagine Hosoda-san ran out of ideas when labelling the last one NT.

Limited use of price targets

To be frank, I hardly ever use the Price Target part of the analysis at all. I find it far too fiddly and overly simplistic. Something of a straightjacket. I also dislike the fact that it predicts such a relatively short price and time ahead. This is all very well for very active rice traders perhaps, and when you are only looking at a very few financial instruments. But for investors, and those who want to take a longer term view, it has little value. Also it makes it very difficult to decide whether a trade is worth doing - the ‘reward’ side of a risk/reward measure is likely to be small because such a short time frame is used. However, this is perhaps worth investigating further using weekly candles.
In terms of Price Targets I tend to stick to traditionalWestern methods. I do however think that for very active traders who only cover a very limited number of instruments this Japanese version is superior. One can be far more precise and capture a lot more of the intra-day price moves and trade profitably in periods of congestion.

Of far more interest are the cyclical underpinnings of the Timespan Principle, which we come to next.