The Tenkan-Sen, also known as the Conversion Line, is a technical indicator used in the Ichimoku Kinkō Hyō system, a technical analysis method that originates from Japan. The Ichimoku system is used to identify trends and support and resistance levels in the price of a security.The Tenkan-Sen is calculated as the average of the highest high and the lowest low over the past nine periods. It is represented by a single line on a chart.Formula: -Tenkan-Sen = (highest high + lowest low) / 2 over the past 9 periodsFor example, if the highest high over the past 9 periods is $100 and the lowest low is $80, the Tenkan-Sen would be calculated as ($100 + $80) / 2 = $90.
The Tenkan-Sen is typically used in conjunction with other indicators, such as the Kijun-Sen and the Chikou Span, to generate trading signals. A bullish signal is generated when the Tenkan-Sen crosses above the Kijun-Sen, and a bearish signal is generated when the Tenkan-Sen crosses below the Kijun-Sen.The Tenkan-Sen can also be used to identify support and resistance levels in the price of a security. When the price of a security is above the Tenkan-Sen, it is considered to be in an uptrend, and when the price is below the Tenkan-Sen, it is considered to be in a downtrend.In summary, Tenkan-Sen, also known as the Conversion Line, is a technical indicator used in the Ichimoku system to identify trends and support and resistance levels in the price of a security. It is calculated as the average of the highest high and the lowest low over the past nine periods and it is represented by a single line on a chart. It's typically used in conjunction with other indicators in the Ichimoku system to generate trading signals.