The indicator remains very popular in Japan, and there is a theory that it works better when applied on the Japanese Yen currency pairs and the Nikkei, as those are the most widely traded instruments in Japan. Translated into English, the name of the indicator is "One glance equilibrium chart" as traders can derive a variety of information from it. The indicator can appear complex at first and traders that prefer to keep their charts "clean" to prevent information overload might have doubts about it.
However, the Ichimoku indicator tells us quite a lot, and there is no need to use too many additional indicators. A trader should understand all of the components that make up an Ichimoku chart before they can execute it successfully as a part of their technical analysis.
Find out below how each part of the Ichimoku Cloud can contribute information when plotted on a chart. Using the Ichimoku indicator, a currency pair is in an uptrend when the price is trading above the cloud and the cloud is in green territory.
On the other hand, a currency pair is in a downtrend when the price is trading below the cloud and the cloud is in red territory. Trend followers who use this indicator will generally only consider long trades when it shows an uptrend and only consider short trades when it shows a downtrend. The cloud also indicates the level of volatility. Large price movements will lead to a thicker cloud, while a period of consolidation will create a thinner cloud. In the example below, we can see that the cloud started to widen in early June, which marked the beginning of a period of high volatility.
Some traders use the Chikou Span as an additional confirmation of the trend i. If the price is above the Senkou Span, traders look at the top line as the first level of support, followed by the bottom line as the second level of support. If the price is located below the Senkou Span, traders look at the bottom line for the first level of resistance, and the top line as the second level of resistance.
Below are 3 examples of a cross. Here we will show you two different Ichimoku Cloud trading strategies - one bullish example and one bearish example. A trader would buy once the price breaks through the cloud or sell once the price goes below the cloud. Below is a bearish example of this strategy.
The price broke below the cloud in mid-August and the currency pair extended losses by more than pips. That cross could signal that the short-term downtrend has ended and there is no more room for the downside. Recommended reading: Effective forex trading strategies for beginners. US is in a strong uptrend and the price is located above the cloud. We will therefore be looking for buy opportunities.
In mid-May, there was a bearish cross followed by a bullish cross one week later. We would have ignored the bearish cross as the US is in a strong uptrend and trading above the cloud. The bullish cross would have been a valid entry signal, however, as we can see, the US has extended gains significantly since then.
Follow the steps below to add the Ichimoku Cloud indicator to your trading chart in MetaTrader 4. The Ichimoku Cloud indicator can be used on any time frame, and there is no "best" one. It all depends on what type of trader you are. However, you should be aware that the Ichimoku indicator works best when the market is trending - and this applies to all time frames. Therefore, it is not required to use many additional indicators together with the Ichimoku Cloud, as it could create conflicting signals.
However, traders might choose to add an oscillator to their charts, which can signal overbought and oversold conditions. It is also worth keeping an eye out for divergences between the price and the oscillator. Variety of Information - the Ichimoku Cloud indicator can help us determine the trend, support and resistance levels and momentum. Cutting Down the Number of Indicators - While the Ichimoku Cloud indicator does take up quite some space on the chart, it will reduce the number of indicators you will need overall, which means that there is less risk of receiving conflicting signals.
Information Overload - Beginners might find themselves overwhelmed by the amount of information given by the Ichimoku Cloud indicator. It will take some time to learn what all its components represent and how to use them efficiently. It seem not good for coin. Great strategy! There is only one question troubling me. At the candle that you can enter a trade, how do you find your limit buy order? Do you have any tips for me, please? HI 1st of all i would like to Thank you.
Please if you have the possibility to explain these questions. Please take a look at this statement. Should it not be the other way around, that is Leading Span A above B indicates increased momentum? Your strategy guides have always been very informative and educative and have been very helpful.
I don't see where to subscribe. Kindly add me to your subscription list. Thanks a lot. What are the odds? Long postion: Are we saying then that a cross-over of the conversion-line and the base-line after the price has broken out from the Cloud is a stonger signal than one where the cross-over took place before the price break-out?
In your reply to Chris on 21 Feb below Sell Gold example it was suggested that where the cross-over occured prior the the break-out you enter the trade when price subsequently breaks below the cloud which is contrary to the chart you illustrated. Excellent teaching. Excellent strategy. Thanks for the teaching. Will be learning more from you on your website and u-tube channel. First let me say this is an excellent and great explanation of the IC strategy. Shouldn't the second sentence read When leading A is above leading Span B?
If I am wrong I apologise for wasting your time. I am new to trading but trying to soak up as much information as I can. Hi, thank you so much for your kindly explaination for this cloud strategy, I more understand it after I read your article than other's article.
Please, I have a question, if we use this strategy on hourly data, should we wait for the same pattern occur on 4 hour data too in order to make an entry point? Or we just look for the entry point pattern at hourly data only? Thank you for your explaination. Hey, i really appreciate everything you guys have done and all the time and effort you put in to helping us. My only question is, what currency pairs work best with this strategy? Hi, Thanks a lot for this strategy. I implementing this strategy on Hourly data but do I need to take seconds data for this Step 3 Buy after the crossover at the opening of the next candle.
I found the longer the timeframe the more accurate the entry. But if you are using the 1H timeframe and above, you will need a lot of patience and don't enter trades blindly or rush into it. I personally use 15m and it works great also. What do you use as your stop-loss for the lower time frame trades? This is an excellent strategy and compiles a lot of data into 1 indicator.
That's great! I have a question about buying. If the crossover of Conventional Line above the Base Line happens below the Ichimoku Cloud and price is still below the Ichimoku Cloud, when would you buy? Would you buy as soon as price breaks above the Ichimoku Cloud, so long as the Conventional Line stays above the Base Line? Thanks so much for the insight! It means alot to see that people like you are loving this content. You would buy when price has broke above, like you said.
Ichimoku trading strategy has everything you need to trade successfully. From identifying support and resistance levels to clearly identifying trends irrespective of the timeframe. I request you to send a PDF copy for detailed and internalization. Thank you for explaining this awesome strategy, but i have 1 question.
In the sell example, the crossover already took place before or at the same time the candle broke trough the cloud, but you did not take the trade and waited for the next crossover. Can you explain why in the sell example you have to wait? The candle broke and closed below the cloud. The baseline was already over the conversion line. You are proposing waiting and letting the Conversion line cross over the baseline and then the baseline cross back over the conversion line.
Has it been your experience that when the candle breaks the cloud and the baseline is already over the conversion line there will be a retrace? This allows the conversion line and the baseline swap back and forth? Please explain I love this system and want to learn.
You can enter the trade if you wish but I think their strategy of waiting will filter out a lot of false signal in the long run. Hope this helps. Do you want consistent cashflow right now? Our trading coach just doubled an account with this crashing market strategy! Please log in again. The login page will open in a new tab. After logging in you can close it and return to this page. Table of Contents hide. Author at Trading Strategy Guides Website.
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Refer to the Kijun/Tenkan Cross. The potential crossover in both lines will act in a similar fashion to the moving average crossover. Confirm Down/Uptrend With Chikou. Price Action Should Break Through the Cloud.