DEFINITION of 'Kijun Line'

The Kijun Line is the midpoint between the highest high and lowest low of a security over a specified period of time, and is used in the creation of the Ichimoku Cloud. It's one of the two moving average lines displayed on the chart, and is a 26-period moving average.

Also, called Kijun-Sen Line.

BREAKING DOWN 'Kijun Line'

The Kijun Line is the Base Line used in the Ichimoku Kinko Hyo, or Ichimoku Cloud.

The Ichimoku Cloud is a versatile technical indicator that defines support and resistance, measures momentum, and provides buy and sell signals. Its developer, Goichi Hosoda, designed the indicator to be a "one look equilibrium chart" that simplified technical analysis.

There are several different lines included in the Ichimoku Cloud calculation, including the Kijun Line:

  • Tenkan-Sen - Conversion Line
  • Kijun-Sen - Base Line
  • Senkou Span A - Leading Span A
  • Senkou Span B - Leading Span B
  • Chikou Span - Lagging Span

While the Cloud, or Kumo, is the most prominent feature of Ichimoku Cloud charts, the Kijun Line generates trading signals when it crosses above or below the Tenkan Line. The Cloud often provides traders with an indication of where support or resistance lies above or below the prevailing trend. It's important to note that the Kijun Line lags behind the Tenkan Line and trails the price with less sensitivity because it covers a longer period of time.

Often times, the Kijun Line and Ichimoku Cloud is used in conjunction with other forms of technical analysis, such as chart patterns or technical indicators, despite being designed to be a singular source of market information. For example, traders may look at an Ichimoku chart to see where key support or resistance lies when setting stop-loss or take-profit points and then use other forms of technical analysis to actually enter trades.

Example of a Kijun Line

The following chart shows an example of an Ichimoku Cloud indicator applied to the SPDR S&P 500 ETF (NYSE ARCA: SPY).

Kijun Sen Line Example Chart

In the chart above, the Kijun Line can be seen in red and the Tenkan Line can be seen in blue. The Tenkan Line is about to cross above the Kijun Line in the most recent period, which could be a bullish signal for the upcoming weeks. The green Cloud shows that strong support lies significantly below the current price, however, which could suggest that the index has been overbought for quite some time.

Chart courtesy of StockCharts.com.

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