3 Profitable Ichimoku Trading Strategies

If Chikou-Span passes the market price, then trader can place and order using other confirmations. Energy Price on Kjun-sen Options on: Trade short when the Conversion Line crosses below the Base Line. The rules of the strategies are: Introduction to Introducing Broker - IB.

Ichimoku Indicator – Simple Approach to Trading

Similar to a simple moving average, when the price is trading above the cloud this typically signals that the asset is in an uptrend.

When the price is trading below the cloud this typically indicates the asset is in a downtrend, as shown in Figure 2. Strong uptrends or downtrends usually stay above or below the cloud respectively. If the price moves fully through the cloud it indicates a reversal of the trend is potentially underway. Determine Strength and Weakness: The thicker the cloud typically the harder it will be to pierce. On the other hand, if the cloud is very thin it indicates indecision and that the trend losing a bit of steam.

Wait to see what happens; either the former trend will continue and you can trade with it, or the price will move right through the cloud indicating there may be a reversal trade. Ultimately, the best strategies are the ones that align your trades with the trend. The cloud helps you see the trend so you can trade with it. If the trend is up, you want to buy calls when the price drops toward the cloud but then begins to bounce off of it, moving higher once again.

If the trend is down, you want to short buy puts when the price rallies toward the cloud, bounces off it and starts moving lower again. When the price enters the cloud, hold off on making a trade until the price starts trading either above or below the cloud, and then use the strategy mentioned above. While all indicators have their weaknesses, and losing trades will always occur, Ichimoku is good for traders who like the visual nature of indicators and are looking for a quick way to assess trades.

Everything that is between the two lines represents the cloud. Of course, the usual caveat applies: Ichimoku indicator is famous throughout the world as it brings a new and simple approach to trading as it is acting both as a trending indicator as well as a potential oscillator.

As a matter of fact, on some trading platforms it is listed as a trend indicator while on others as an oscillator. The cloud or the Kumo is by far the most important part of the indicator and it is having two different colors: The fact that the cloud is projected 26 periods ahead of current prices is showing us that the moment the cloud turns the color we should be careful into continuing with the previous trend.

The next thing to look for is to wait for the Kinjun the blue line and Tenkan the red line to cross as this cross is a bullish one if it happens below the cloud and a bearish one if it happens above the cloud. One way to trade binary options and forex CFDs with the cloud is to use an additional oscillator, like the RSI for example that should offer divergence confirmation to the regular trader.

The expiration date should be closely correlated with the time frame the pattern is forming on as it is making no sense to trade a small expiration date if the time frame is bigger than 4h chart or a long expiration date is the time frame is the 5m or the 1m chart. When riding a trend then one should make sure the Tenkan is always on top of Kinjun in a bullish trend and below the Kinjun in a bearish trend and buying the dip or selling the spike strategy works like a charm each and every time price is retracing into the Kinjun line.

The cloud also acts as a classical support and resistance level as well as a dynamic support and resistance and a trader knows that in advance for quite some time as the 26 periods that are being projected represent 26 different candles. If the time frame is the monthly chart for example then the 26 periods represent 26 months and we already have an idea from current levels were price should hesitate in the time ahead.

Dynamic support and resistance is always more important than the classical one and this feature makes the Ichimoku Cloud unique as an indicator that any trader should know how to master. The cloud also offers the possibility to trade call or put options both when it is tested for the first time, on its top or bottom and when it is tested for the second time on the upper or lower part. From this point of view it is offering a range and the way to trade is to measure the length between the upper side of the cloud and the lower one, basically between Senkou A and Senkou B and that range should be divided into as many parts as options intended to trade are.

Choosing an expiration date here should be correlated as well with the time frame the indicator is applied. Try using this technical strategy with bitcoin on AvaTrade platform. This website is independent of of all forex, crypto and binary brokers featured on it. Before trading with any of the brokers, potential clients should ensure they understand the risks and verify that the broker is licensed.

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