Ichimoku Wave Theory

Goichi Hosoda developed his own Wave Theory. He knew about the Elliott wave principle, but his rendering of it was not as complex as the original. Hosoda did not share such a detailed and intricate view, and chose instead a simpler version focused on the identification of patterns.

Those patterns allowed him to monitor any trend structure, but not to define clear target levels or take profits — that job belongs to price projection theory. More than a predictive value, the patterns let you monitor the structure of a trend as it unfolds.

He classified movements into two families: three principal patterns and two secondary patterns.

Principal movements: I, V and N

The three principal patterns describe how many legs a movement has completed.

Secondary movements: P and Y

The two secondary patterns describe consolidation inside a trend, according to whether the range contracts or expands.

What the patterns are for

Wave structure answers the question of where in the movement price currently is. It does not, on its own, say how far the move should travel or when it should end. Those are the jobs of the other two core essences: price margin observation gives the levels, and the time element gives the durations.

Hosoda did not set out a rigid system but a framework, and the three theories are meant to be read together.