What is 'Kijun-Sen'

The Kijun-sen is a major indicator line and important component of the Ichimoku Kinko Hyo method of technical analysis, which also known as the Ichimoku cloud or simply Ichimoku

In charting market trends, Kijun-sen is generally indicative of medium-term momentum: prices higher then the calculation will probably rise, and those lower than it will probably fall.

The Kijun-sen line calculation utilizes the following formula:

That formula is almost identical to the one used to calculate the Tenkan-sen line, but differs in that the quantity of time periods used in the calculation is increased so long-term momentum trends can be assessed more effectively.

BREAKING DOWN 'Kijun-Sen'

The Kijun-sen is nearly always used alongside the Tenkan-sen, which helps gauge whether markets are trending or ranging, to generate predictions of likely future price movements.

When the Tenkan-sen line moves above the Kijun-sen line, a buy signal is created; conversely, a  sell signal is created when the Tenkan-sen line moves below the Kijun-sen line.

The Kijun-sen line, as with each other individual element of the Ichimoku cloud method, should never be considered in isolation but only in context with the entire chart.

In addition to Kijun-sen, which is typically viewed as a trigger line for traders that implement the Ichimoku cloud method, there are three other major components of this method.

As mentioned, Tenkan-sen usually is used in tandem  with Kijun-sen to generate buy and sell signals. Its formula takes the highest high and the lowest low and divides by two; it is calculated over the past seven to eight time periods.

Senkou Span A, meanwhile, refers to the sum of the Tenkan-sen and the Kijun-sen, divided by two. This calculation is plotted ahead of current price movement by 26 time periods. And Senkou Span B totals the highest high and lowest low, divided by two. The calculation is taken for the past 52 time periods and, like span A, is plotted ahead 26 time periods.

After being plotted, the space between the Tenkan-sen and Kijun-sen is known as the kumo, or cloud. This cloud is substantially thicker than general resistance and support lines and provides traders a much more thorough filter. The cloud typically accounts for volatility. When a line breaks through the cloud and movement follows, either above or below, a better trade is suggested.

Kijun-sen's Importance to Ichimoku Cloud

The Ichimoku cloud method was published in 1968 by Goichi Hosoda, a Tokyo journalist who had tinkered with the approach for some three decades prior, since the 1930s. It was co-developed along with a number of assistants who helped run various calculations over the years, honing the method.

The complex method, with all its Japanese terms, may be daunting to traders, but it is very useful as it provides a variety of tests on price action and allows for higher probability trades.

Kijun-sen, specifically, can offer important insights, and many traders see it as a superior indicator, when viewed in context of other Ichimoku components, compared with other moving averages.

As one investor wrote, "The Kijun-sen is one of the "hardest working" lines in ichimoku, it just keeps giving us vital clues almost constantly throughout the day." He noted that the Kijun-sen offers the same information as its "brother," the Tenken-sen, but its longer time frame makes it "more reliable when it comes to measuring short term price sentiment and strength."

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