What Is a Tenkan-Sen (Conversion Line)?

Tenkan-Sen, or Conversion Line, is the mid-point of the highest and lowest prices of an asset over the last nine periods. The Tenkan-Sen is part of a larger indicator called the Ichimoku Kinko Hyo, which shows potential 澳洲幸运5开奖号码历史查询:support and resistance areas based on different timeframes. Ichimoku Kinko Hyo roughly means "one 🔯look equilibrium chart," and is commonly called the Ichimoku Cloud indicator.

The Ichimoku Cloud indicator was developed by Japanese journalist Goichi Hosoda and promoted to the public in 1969. The Ichimoku combines a typical 澳洲幸运5开奖号码历史查询:candlestick chart with five additional lines that measure price movement and volatility. One of those lines is the Tenkan-Sen.

The Formuﷺla for the Tenkan-Sen (Conversion Line)

 $\begin{aligned} &\text{Tenkan-Sen(Conversion Line)}: \frac {(9PH + 9PL)}{2}\\ &\textbf{where:}\\ &PH = \text{Period High}\\ &PL = \text{Period Low}\\ \end{aligned}$​Tenkan-Sen(Conversion Line):2(9PH+9PL)​where:PH=Period HighPL=Period Low​

How to Cal🐠culate the Tenkan-Sen (Conversion Line)

1. Find the highest price in the last nine periods.
2. Find the lowest price in the last nine periods.
3. Add these values together and then divide by two.
4. Repeat the process as each period ends.

Understanding the Tenkan-Sen (Conversion Line)

The Tenkan-Sen shows an asset's short-term price momentum. On its own, it shows the mid-point price over the last nine periods. Due to the very short-term nature of the indicator, it is not typically used on its own but rather used in conjunction with the other elements of the Ichimoku Cloud indicator.

For example, if the Tenkan-Sen moves above the 澳洲幸运5开奖号码历史查询:Kijun-Sen (Base Line), which is the 26-period price mid🅠point, some 🌞traders view that as a buy signal. Conversely, if the Tenkan-Sen drops below the Kijun-Sen, it may be viewed as a sell signal.

These signals are also filtered via the "cloud," a colored part of the indicator that is used to help identify the trend. When the price is above the cloud the trend is up, and when the price is below the cloud the trend is down. If the price is moving within the cloud, that often indicates 澳洲幸运5开奖号码历史查询:choppy trading, or that the trend is in t💟he process of reversing.

Therefore, when the price is above the cloud, traders may prefer to buy when the Tenkan-Sen crosses above the Kijun-Sen. They may also sell that 澳洲幸运5开奖号码历史查询:long position when it crosses back below.

In a downtrend, when the price is below the cloud, traders may 澳洲幸运5开奖号码历史查询:short-sell when the Tenkan-Sen crosses below the Kijun-Sen. They may cover the short pos༺ition when the Tenkan-Sen crosses back above th🧜e Kijun-Sen.

The Tenkan-Sen also plays a role in generating 澳洲幸运5开奖号码历史查询:Senkou Span A, one of two lines creating the "cloud" on the Ichimoku indicator. The edges of the cloud indicate support and resistance points, and the thickness of the cloud indicates price 澳洲幸运5开奖号码历史查询:volatility. 𒁃As indicated above, the cloud also helps🎃 identify the trend.

The Tenkan-Sen (Conversioꦺn Line) vs. a Simple Moving Av🦩erage (SMA)

The Tenkan-Sen is sometimes wrongly confused with a 澳洲幸运5开奖号码历史查询:simple moving average (SMA). The Tenkan-Sen is a mid-point, calculated by adding the nine-period high and low and dividing by two. This is a different calculation than a SMA, which would add up the 澳洲幸运5开奖号码历史查询:closing prices from 𒉰the nine periods and then divide the totꦛal by nine.

Limitations of Using t🐼he Teꦐnkan-Sen (Conversion Line)

The Tenkan-Sen moves closely with the price, so it doesn't provide a lot of information on its own, except possibly to very short-term traders. Because of this, the Tenkan-Sen is typically used in conjunction with other lines in the Ichimoku indicator.

澳洲幸运5开奖号码历史查询:Crossover trade signals are sometimes used between the Tenkan-Sen and the Kijun-Sen. While these crossover trade signals may produce high-profit trades, the strategy is also prone to whipsaws. This is when🍌 crossovers occur but the price fails to move as anticipated, resulting in more crossovers and losing trades.

The Tenkan-Sen is the mid-point price of the last nine periods. There is nothing inherently predictive in its calculation. Therefore, while it may provide some insight and trade signals, traders are well advised to also incorporate other forms of analysis, such as 澳洲幸运5开奖号码历史查询:price action and other indicators, into their strategy, as opposed to relying exclusively on the I🐟chimoku indicat𒉰or and its elements.