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官方开奖结果体彩网:support and resistance areas based on different timeframes. I𝓀chimoku 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官方开奖结果体彩网:candlestick chart with five additional lines that measure price movement and volatility. One of those lines is the Tenkan-Sen.

The Formula for the ꦕTenkan-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 Calculatඣe 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官方开奖结果体彩网:Kijun-Sen (Base Line), which is the 26-period price midpoint, some trader🔥s 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官方开奖结果体彩网:choppy trading, or that the trend is in the process of r﷽eversing⭕.

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官方开奖结果体彩网:long position when it crosses back below.

In a downtrend, when the price is below the cloud, traders may 澳洲幸运5官方开奖结果体彩网:short-sell when the Tenkan-Sen crosses below the Kijun-Sen. They may cover the short position wheꦏ🐻n the Tenkan-Sen crosses back above the Kijun-Sen.

The Tenkan-Sen also plays a role in generating 澳洲幸运5官方开奖结果体彩网: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官方开奖结果体彩网:volatility. As indicated abo♏ve, the cloud also helps identify the trend.

The Tenka🧸n-Sen (Conversioᩚᩚᩚᩚᩚᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ𒀱ᩚᩚᩚn Line) vs. a Simple Moving Average (SMA)

The Tenkan-Sen is sometimes wrongly confused with a 澳洲幸运5官方开奖结果体彩网: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官方开奖结果体彩网:closing prices from the nine per𝓀iods 💮and then divide the total by nine.

Limitations of Using thᩚᩚᩚᩚᩚᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ𒀱ᩚᩚᩚe Tenkan-Sen (Con🦋version 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官方开奖结果体彩网: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 ඣwhen crossovers occur but the price fails to move as an🅺ticipated, 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官方开奖结果体彩网:price action and other i♐ndicators, into their strategy, as opposed to relying exclusively on the Ichimoku indicatoꦬr and its elements.