i Chimo Ku Clouds
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Transcript of i Chimo Ku Clouds
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Planetary2LibraryICHIMOKU CLOUD LIBRARY
Introduction:
In1969,GoichiHosada,ajournalistinTokyo,developedaveryversatileindicatorthathas
withstoodthetestoftime.TheIchimokuCloud,isalsoknownasIchimokuKinkoHyo,which
translatesintoOneglanceequilibriumchart. Theindicatordefinessupportandresistance,
identifiestrenddirection,gaugesmomentum,andprovidestradingsignals.Itcanalsobeused
withwesternindicatorstohelpconfirmtheirsignals.TheIchimokuCloudcanlook
overwhelmingatfirst,howeveritisverystraightforward,theconceptsareeasytounderstand,
anditssignalsareclearlydefined.
ThislibraryisincludedforPlatinumClubmembers,andmaybepurchasedseparatelyforthe
GoldversionofTradeNavigator.
Benefits:
CommodityTraders: Commoditiestraderscanbenefitfromthisversatileindicatorthatdefines
support/resistance,identifiestrenddirection,andgaugesmomentum. Trendscanbeidentified
usingtheIchimokuCloud,then,classicmomentumoscillatorscanbeusedtoidentify
overbought
or
oversold
conditions.
ForexTraders: Infastmovingcurrencymarkets,Forextraderscanidentifythetrendandlook
forpotentialsignalswithinthattrendwithaquickglance.
StockTraders: TheIchimokuCloudisusableduringrangeboundmarkets,anditsperformance
oftenimproveswhenusedoverlongertimeframes.
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IncludedinthisLibrary:
Templates
IchimokuCloud Prebuiltchartlayoutwhichreplacesyourchartscurrentindicators
with
the
Ichimoku
Cloud
settings
Studies
IchimokuCloud Prebuiltgroupoffunctionswhichaddsthecloudsettingstoanexisting
chart
Indicators
ChikouSpan representedonthechartsasthecloseoftoday'spriceactionshiftedback
26daysorperiods
KijunLine Forshowingmomentum
Senkou
Span
A
plotted
26
periods
in
the
future
and
forms
the
faster
Cloud
boundary
SenkouSpanB plotted26periodsinthefutureandformstheslowerCloudboundary
TenkanLine Forshowingmomentum
FunctionDescriptions:
Tenkansen:Thedefaultsettingis9periodsandcanbeadjusted.Onadailychart,thislineisthemidpoint
ofthe9dayhighlowrange,whichisalmosttwoweeks.
Kijunsen:
Thedefaultsettingis26periodsandcanbeadjusted.Onadailychart,thislineisthemidpoint
ofthe26dayhighlowrange,whichisalmostonemonth).
SenkouSpanA:ThisisthemidpointbetweentheConversionLineandtheBaseLine.TheLeadingSpanAforms
oneofthetwoCloudboundaries.Itisreferredtoas"Leading"becauseitisplotted26periods
inthefutureandformsthefasterCloudboundary.
SenkouSpanB:
Onthe
daily
chart,
this
line
is
the
mid
point
of
the
52
day
high
low
range,
which
is
alittle
less
than3months.Thedefaultcalculationsettingis52periods,butcanbeadjusted.Thisvalueis
plotted26periodsinthefutureandformstheslowerCloudboundary.
ChikouSpan:Closeplotted26daysinthepast. Thedefaultsettingis26periods,butcanbeadjusted.
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TheCloudor
Kumoisthemost
dominatingfeature
ofthistypeof
chart.TheSenkou
SpanA
(green),
whichisthe
averageofthe
KijunandTenkan
lines,andthe
SenkouSpanB
(red),basedoffthe
52dayhightolow
range,formthe
Cloud.Duetothe
factthatHosada's
ideawastohavea
onelookchart,
therearetwoquickwaystodeterminetheoveralltrendusingtheCloud.
First,whenmarketisabovetheCloudtheoveralltrendisbullishandwhenthemarketfalls
belowtheCloud,thetrendisbearish.
Secondly,theuptrendisalsobullishwhentheSenkouSpanAisrisingandabovetheSenkou
SpanB,whichwillproduceagreenCloud.
Bullishsignals
appear
in
the
opposite
formation,
the
Senkou
Span
A
is
falling
and
below
the
SenkouSpanB,whichwillcreatearedCloud.SpanAandSpanBarealsousedassupportand
resistance,sincetheCloudisshifted26days,itidentifiespossibleareasoffuturesupportand
resistance.
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Thischartshows
theS&P500Index
(TradeNavigator
Symbol:$SPX)ona
dailybarperiod.
Themarket
has
brokenabovethe
cloudandSpanAis
risingaboveSpanB
creatingabullish
trendinthemarket.
Inthischartit
showstheDow
JonesIndustrial
Average(Trade
NavigatorSymbol:
$DJIA)
on
a
daily
barperiod.The
markethasbroken
belowthecloud
andSpanAisfalling
belowSpanB
creatingabearish
trendinthe
market.
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TenkansenandKijunsenSignals
TheTenkan(blue)andKijun(red)linesarebasedoffofthehightolowrangeofthelast9and
26days.MuchliketheMACD,theselinesareusefulforshowingmomentuminthemarket.The
theoriesbehindtheselinesareusedmuchlikeacrossoverintheMACD.Forexample,abullish
signalthe
market
must
be
above
the
Cloud
and
the
Span
A
line
must
be
rising
above
the
Span
B
line.WithastrongbullishsignalaninvestorshouldlookforacrossoftheTenkanlineabovethe
Kijunline.IfthishappensintheClouditcanbeconsideredamildtomediumsignal,however,if
thisoccursabovetheClouditisconsideredamediumtohighsignal.Ifthecrossabovehappens
belowtheCloudthesignalisnolongervalidduetothefactthemarketwillbetradinginto
resistance.
Movingontothebearishsignals,themarketshouldbebelowtheCloudandtheSpanAlineis
belowtheSpanBline,therefore,thereisabearishtrendinthemarket.
Investors
should
identify
a
crossover
of
the
Tenkan
line
below
the
Kijun
line
for
a
valid
signal.
If
thecrossbelowhappensabovetheCloudthesignalisnolongervalidduetothefactthe
marketwillbetradingintosupport.Wherethiscrossoverhappens,cantelltheinvestors,the
strengthofthetrendorifthetrendwillcontinue.
BelowisachartoftheEuroFXFuturesContract(TradeNavigatorSymbol:G6E067)basedona
dailybar.InthischarttheCloudturnsfromredtogreensignalingapossiblechangeintrend.
OncethemarketbreaksabovetheCloudandtheTenkanlinecrossesabovetheKijunlinea
bullishsignalisconfirmed.TheTenkanLinealsostartstopullawayfromtheKijunlineasthe
trendgetsstronger.
Someinvestors
prefertoholdtheir
positionsuntilthe
Tenkanlikecrosses
belowtheKijun
line,thisindicates
thetrendislosing
strengthand
tradingbackinto
support.
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Thisisachartofthe
Forexpairingofthe
U.S.Dollar
comparedtothe
JapaneseYen
(TradeNavigator
symbol:$USDJPY)
basedonadaily
bars.
ThefirstcrossoveroftheTenkanlinebelowtheKijunlineoccursatthetopofthecloud.Once
themarketclosesoutsideofthecloudadowntrendisconfirmed.TheTenkanlinethencrosses
backabovetheKijunlineandthemarketisheldatSpanAwherethereisresistance.The
marketcontinuestoridetheSpanAlineforacoupleofweeks.ThentheTenkancrossesonce
againbelowtheKijunlineandclosesoutsideofthecloud,forareentrysignal.Inalarger
downtrendthesesignalscanbeveryrewardingtoinvestors.
Marketand
Kijun
sen
Signals
ThemarketwilloftenpullbacktotheCloudandmeetresistanceorsupport.Inthiscasewhat
aninvestorshouldbelookingforisthemarkettocrosstheKijunline(red).Thisindicatesthat
themarketiseitheroverboughtoroversold.Abullishsignal,themarketwillmeettheCloud
bullishsignalsandthenpullbackundertheKijunline.Thisshowsthatthemarketisinashort
termoversoldareawithinalargeruptrend.OncethemarketbreaksabovetheKijunlinethe
bullishtrendcancontinue.
OftenaninvestorcanenterintothemarketbasedonthissignalorwaitfortheTenkanlineto
cross
above
the
Kijun
line,
for
a
confirming
signal.
The
market
must
line
up
with
the
Cloud's
bearishsignalsandthemarketshouldbounceabovetheKijunlineforbearishsignals.Thistells
investorsthatthemarketisinashorttermoverboughtareaswithinalargerdowntrend.
AfterthemarketpullsbackbelowtheKijunlinethebearishsignaloccurs.Again,theinvestor
canenterintothemarketwiththebreakbelowtheKijunlineorwaitforaconfirmingcrossover
oftheTenkanlinebelowtheKijunline.
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Thischartshows
Verizon
Communications
Inc.(Trade
NavigatorSymbol:
VZ)on
adaily
bar.
Theoveralltrendin
themarketisup
withthemarket
beingabovethe
greenCloud.The
marketthenpulls
backtotheCloud
andclosesbelow
theKijunline
showingthemarket
hasreachedashort
termoversoldarea.
ThemarketstaysintheCloudforacoupleofdaysthenclosesabovetheKijunlineandabove
theCloud.AfewdaysaftertheTenkanlinethencrossestheKijunlineforaconfirmationsignal.
Thischartshows
ChicagoWheat
(TradeNavigator
Symbol:W2067)
basedon
adaily
bar.Theoverall
trendinthemarket
isdownwhenthe
marketreachesa
tippingpoint.The
marketthencrosses
overtheKijunline,
signifyinganareaof
overbought.The
prices
try
to
reach
theCloudbutnever
makeitandthen
crossbelowthe
KijunlineinmidMarch,soonaftertheTenkanlinecrossesbelowtheKijunlinetoconfirmthe
bearishmove.
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InmidAprilthemarketturnsbackintotheCloudandismetatresistance.Afterasideways
periodinearlyMaythepricesmovebackbelowtheKijunlineandcloseoutsideoftheCloudto
confirmanotherdowntrend.Shortlythereafter,theTenkanlinecrossesbelowtheKijunlineto
confirmthebearishmove.
ChikouSpan
TheChikouSpanisrepresentedonthechartsasthecloseoftoday'spriceactionshiftedback26
daysorperiods.UsingtheChikouSpanasanadditionalfiltercanbehelpfulaswell.For
example,IftheTenkanlinecrossesabovetheKijunlineinabullishtrend,theChikouSpan
confirmsthetrendifthelineisabovethecloud.StrongersignalsoccurwhentheChikouSpanis
abovetheprice26periodsago.TheChikouSpanisalsousedinasimilarfashiondurninga
downtrend.TheChikouSpanmustbebelowthecloudandforstrongersignalsbebelowthe
priceaction.
ConfirmingBullish
Signal
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Confirming BearishSignal
Synopsis
TherearefourbasicbullishandbearishsignalsthatarecoveredwiththeIchimokuCloud.
TrendfollowingsignalsrelyontheCloudformedbySenkouSpanAandSpanB. Momentumof
themarketfocusesontheTenkansenandKijunsen,thatrespondsimilartotheMACD.
OverboughtandOversoldareasaredeterminedbythemarketcrossingaboveorbelowthe
slowerhightolowaverageoftheKijunsenline.
Investorsneedtorememberthatitisimportanttonotgetlostinthelinesofthesechartsbut
tofocusontheclearanddirectsignalsthattheIchimokuCloudindicatorcanproduce.The
Cloudofferssupportandresistanceduringlargertrendsandforeshadowswhatistocome.As
always,itismoreadvantageoustotakeadvantageofbullishsignalsinanuptrendandbearish
signalsinalargerdowntrend.
TheIchimokuCloudcanalsobeusedinconjunctionwithwesternindicators.Traderscan
identifythetrendusingtheCloudandthenuseclassicmomentumoscillatorstoidentify
overboughtoroversoldconditions.
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BullishSignals:PricemovesaboveCloud(trend)
Cloudturnsfromredtogreen(ebbflowwithintrend)
PriceMovesabovetheKijunLine(momentum)
TenkanLine
moves
above
Kijun
Line
(momentum)
BearishSignals:PricemovesbelowCloud(trend)
Cloudturnsfromgreentored(ebbflowwithintrend)
PriceMovesbelowKijunLine(momentum)
TenkanLinemovesbelowKijunLine(momentum)