how to calculate the tenkan sen conversion line 
understanding the tenkan sen conversion line the tenkan sen shows an asset s short term price momentum on its own it shows the mid point price over the last nine periods due to the very short term nature of the indicator it is not typically used on its own but rather used in conjunction with the other elements of the ichimoku cloud indicator for example if the tenkan sen moves above the kijun sen base line which is the 26 period price midpoint some traders view that as a buy signal conversely if the tenkan sen drops below the kijun sen it may be viewed as a sell signal these signals are also filtered via the cloud a colored part of the indicator that is used to help identify the trend when the price is above the cloud the trend is up and when the price is below the cloud the trend is down if the price is moving within the cloud that often indicates choppy trading or that the trend is in the process of reversing therefore when the price is above the cloud traders may prefer to buy when the tenkan sen crosses above the kijun sen they may also sell that long position when it crosses back below in a downtrend when the price is below the cloud traders may short sell when the tenkan sen crosses below the kijun sen they may cover the short position when the tenkan sen crosses back above the kijun sen the tenkan sen also plays a role in generating senkou span a one of two lines creating the cloud on the ichimoku indicator the edges of the cloud indicate support and resistance points and the thickness of the cloud indicates price volatility as indicated above the cloud also helps identify the trend the tenkan sen conversion line vs a simple moving average sma the tenkan sen is sometimes wrongly confused with a simple moving average sma the tenkan sen is a mid point calculated by adding the nine period high and low and dividing by two this is a different calculation than a sma which would add up the closing prices from the nine periods and then divide the total by nine limitations of using the tenkan sen conversion line the tenkan sen moves closely with the price so it doesn t provide a lot of information on its own except possibly to very short term traders because of this the tenkan sen is typically used in conjunction with other lines in the ichimoku indicator crossover trade signals are sometimes used between the tenkan sen and the kijun sen while these crossover trade signals may produce high profit trades the strategy is also prone to whipsaws this is when crossovers occur but the price fails to move as anticipated resulting in more crossovers and losing trades the tenkan sen is the mid point price of the last nine periods there is nothing inherently predictive in its calculation therefore while it may provide some insight and trade signals traders are well advised to also incorporate other forms of analysis such as price action and other indicators into their strategy as opposed to relying exclusively on the ichimoku indicator and its elements 