UK Accounting Glossary
While it can be used as a stand-alone tool, the Senkou Span B is more commonly one of two components in the Ichimoku Kinko Hyo indicator. To derive this indicator, investors plot Senkou Span B alongside Senkou Span A and shade the area between, which is known as the cloud. Investors consider it a bullish signal when Senkou Span A is above Senkou Span B, and a bearish signal when Senkou Span A is below Senkou Span B. Calculation of Senkou Span B is simple: for a designated time period (often 52 time periods), Senkou Span B is the difference between the highest high and the lowest low, divided by two. By definition, Senkou Span B is the longest and slowest component of the Ichimoku indicator. Investors commonly use Ichimoku to predict trend reversals, which occur when Senkou Span A and Senkou Span B cross each other in either direction.
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This glossary post was last updated: 5th February 2020.