The Tenkan line (the red one on most of the platforms) is the first element to be treated under the five elements the Ichimoku indicator offers. The reason for that is that if something is changing, then the first thing to look for when trying to identify a turning point in the trend’s power is to look for the Tenkan to change direction.

The Tenkan line is mainly used as a signal line, offering minor support/resistance for current price action. The higher the time frame, the stronger the support/resistance it offers. It is also called the turning line and it is calculated by averaging the highest high and the lowest low for the past nine periods. So if you are trading the monthly chart for example, then for the last nine candles (months) the highest highs and the lowest lows are being averaged the the result is for the current candle (current month).

Tenkan is an indicator of the market trend and if the line is moving up or down the general interpretation is that the market is trending, while if it stays at the same level (or moves horizontally) the general interpretation is that market is consolidating (ranging). Actually, it is a great tool for identifying ranges, as you can see in the recording that comes with this sub chapter.

The most important thing to remember when trading with Ichimoku Kinko Hyo and looking at the Tenkan line, is that this is the line (element) that is reacting the first to changing market conditions so a change there should alert any trader. Again, the higher the time frame analyzed, the better.