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Learn about an advanced ichimoku trading strategy that focuses on interpreting the core ichimoku cloud, directional bias, momentum, and support/resistance. The video includes real trade setups analysis and several key points on how to use the ichimoku cloud as part of a comprehensive trading system.
Advanced Ichimoku Trading Strategy: Breaking Down the Trade Setups
Introduction
Setting Up the Ichimoku Indicator
Using the Ichimoku Cloud
Gauging Momentum with the Ichimoku Cloud
Confirming Trend Change with the Ichimoku Cloud
Using Ichimoku Cloud for Support and Resistance
Combining Ichimoku Cloud Break and Pullback Entry
Using the Ichimoku Cloud for Trade Exits
Key Points to Remember
Conclusion
Introduction
Welcome to our advanced Ichimoku trading strategy, where we’ll be demonstrating how to apply this strategy to recent killer trade setups. In this article, we’ll discuss the theory and practical applications of the Ichimoku Cloud and how it can be used as a powerful trading tool.
Setting Up the Ichimoku Indicator
To get started with the Ichimoku Cloud, you’ll need to set up the indicator on your trading software. Start by going to your indicators tab and typing in Ichimoku. The indicator will show up on your chart as a series of lines, but we’ll be honing in on the Core Ichimoku Cloud, located between the Leading Span A and Leading Span B.
Using the Ichimoku Cloud
The Ichimoku Cloud can be used in multiple ways to interpret market trends, but we’ll be focusing on what we find to be the most effective. The first step is to determine the directional bias by looking at whether price is above or below the cloud. Above the cloud signals a bullish upward market, while below the cloud signals a bearish downward market.
Gauging Momentum with the Ichimoku Cloud
To further gauge market momentum, we look at the distance between price and the cloud. In an uptrend, the further away price is from the cloud, the stronger the bullish momentum. In contrast, when price moves closer to the cloud, or consolidates within the cloud, it signals a loss of bullish momentum. The same applies in a downtrend, where the distance between price and the cloud signifies the strength of bearish momentum.
Confirming Trend Change with the Ichimoku Cloud
Price breaking through the cloud signifies a trend change. In an uptrend, when price breaks through and ends up below the cloud, it signals a trend change from an uptrend to a downtrend. The opposite applies to a downtrend, where price breaking through and ending above the cloud signifies an uptrend.
Using Ichimoku Cloud for Support and Resistance
In addition to its trend-confirming abilities, the Ichimoku Cloud can also be used as a form of support and resistance. When price is above the cloud in an uptrend and pulls back to the cloud, it acts as a form of support. On the other hand, when price is below the cloud in a downtrend and pulls back to the cloud, it acts as a form of resistance.
Combining Ichimoku Cloud Break and Pullback Entry
To identify higher quality trade setups, it’s possible to combine Ichimoku Cloud breaks with pullback entry points. Once a trend change has been confirmed, traders can identify long or short trade opportunities at these entry points.
Using the Ichimoku Cloud for Trade Exits
Finally, the Ichimoku Cloud can be used to identify trade exit points. Once price reaches the Ichimoku cloud, it may reverse, making it a good idea to consider closing out positions.
Key Points to Remember
While the Ichimoku Cloud can be an effective trading tool, it should not be solely relied upon. Instead, it’s a good idea to combine it with other indicators and analysis methods to ensure better decision making. Also, traders should always exercise caution and never risk more than they can afford to lose.
Conclusion
The Ichimoku Cloud is a powerful trading tool when used correctly, offering trend confirmation, momentum gauging, support and resistance identification, among other benefits. By combining it with other indicators and analysis methods, traders can increase their chances of making profitable trades.
