PREDICT PRICE DIRECTION USING ICHIMOKU CLOUD STRATEGY

PREDICT PRICE DIRECTION USING ICHIMOKU CLOUD STRATEGY

The strategy will teach you to spot momentum and make trading decisions with greater confidence.

Timeframe: all

Currency pairs: all

Market state: trending

Required indicators:

  • Ichimoku Kinko Hyo

The Ichimoku Cloud (or Ichimoku Kinko Hyo in MetaTrader) is an advanced technical indicator that predicts future price movements. This strategy is particularly effective with JPY crosses, but you can apply it to all instruments.

A standard Ichimoku Cloud has five components:

  • Conversion line (tenkan-sen): 9
  • Base line (kiju-sen): 26
  • Leading Span A (senkou span A): not used
  • Leading Span B (senkou span B): 52
  • Lagging Span (chikou span): not used.

Each component is calculated differently and has its settings. For this particular strategy, we will use default settings and exclude the second and the fifth component to simplify the strategy.

Entry conditions for a short position (Sell):

1. Wait until the price breaks and closes below the Ichimoku Cloud.

2. Detect the moment when the conversion line breaks below the baseline.

3. Once the crossover happens, open a Sell order at the next candle opening.

Stop Loss

Place Stop Loss either above the breakout candle or above the previous swing high.

Take Profit

Take your profit when the conversion line crosses above the baseline or when the price starts moving into the Ichimoku Cloud.

Entry steps for a long position (Buy):

1. Wait until the price breaks and closes above the Ichimoku Cloud.

2. Detect the moment when the conversion line breaks above the baseline.

3. Once the crossover happens, open a Buy order at the next candle opening.

Stop Loss

Place Stop Loss either below the breakout candle or below the previous swing low.

Take Profit

Take your profit when the conversion line crosses below the baseline or when the price starts moving into the Ichimoku Cloud.

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