Ichimoku Cloud for Beginners | Ichimoku Trading Strategies Explained

by birtanpublished on October 4, 2020

At first glance ichimoku charts um can seem somewhat intimidating with a lot going on when we're looking at markets but they're also a really powerful way of identifying trends and dynamic support and resistance in a market i thought it'd be interesting to take a look at um ichimoku charts so it's a fairly popular indicator it's been around for um i think 50 years or so now and whilst when you put it on the chart it does make the chart look somewhat cluttered as you can see here and i'm not a fan of cluttered charts i think it is a good

Way of enforcing certain disciplines when it comes to trading so in this video i'll talk through the basics of how issue makuu is constructed we'll come back look on the chart i'll go back talk about strategies then we'll come back and have a look at those in the real world hello i'm david jones from capital.com and i thought we'd do another in our series on trading strategies uh looking indicators this time around

I thought we'd take a look at ishimoku charts some apologies in advance for any mispronunciation uh throughout this video they can be i think a bit intimidating when you first look at them but in this video i'm going to break down how they're constructed and uh some simple trading strategies around it as usual if you're watching this and you haven't subscribed if you could click on subscribe support the channel and it helps us uh produce uh sort of timely market

Content during the week and our occasional series uh on trading strategies for traders we'll jump back on the charts in a couple of minutes before we do that let's talk through uh the construction of issue marker charts so i suppose one way of looking at them uh in certain aspects similar to moving averages if we're familiar those and in other ways uh like a a dynamic form of support and resistance changing as the chart changes let's look at the moving average aspect

First we have what's known as the conversion line this measures the short term uh trend in the market effectively and it's a nine period average but looking at the highs and the lows rather than just at the closing price then we have the baseline on the confirmation line this is a medium term average looking if you're on a daily chart 26 days so it's a 26 period moving average again looking at highs and lows

So we have a shorter term moving average and a more medium term moving average then we have the span line which is a lagging line this is probably looking in the big picture of the trend uh above where the price is trading now the market's got a bullish bias below the market's got various buyers it's the evolution of the current price in relation to the historical price and it's it's a lagging indicator it's plotted effectively 26 candlesticks ahead of where it's actually calculated

This will make more sense when we see it on the chart then we have the cloud the kumu cloud made out of span a and spam b lines this is our dynamic support and resistance a wide cloud below the price suggests strong support wide cloud above the price strong resistance narrow cloud below the price weaker uh support and the same a weaker resistance for a narrow cloud above the price as a general rule of thumb when the price is above the cloud we're looking to go long when it's below the cloud

We're looking to go short expecting further declines as another rule of thumb when the price is actually in the cloud it represents indecision and arguably no trade should be taken let's look at all of this now on the charts and i'll come back and talk about strategies so this is actually a goal chart with ishimako on it let's just walk through some of these lines so first of all the conversion lines and the baselines the ones that are like

Two moving averages so i've colored these in uh light blue and uh dark grey on my chart and you can see they're here just in the middle so the latest signal we've got to jump to just this point here june the 17th where these points crossed over and gave us a signal and at the point at that point you can see the uh the candles were just above the cloud so those are the that's the baseline and the conversion line then we have the lagging span line

That's in purple on my chart here so you can see it here above the price as the price is trending up then we have the cloud i think the cloud is fairly fairly obvious for much of this chart it's below below the price so you can see the cloud here we do get the cloud flipping crossing over but at the moment since uh early may and actually to where we are now into late july uh that cloud has stayed pretty much green so i'll talk a bit now

About how to use uh some trading strategies in theory then we'll come back onto the chart and look at things in more depth so a very simple strategy is almost to treat the baseline and the conversion line as moving averages so so when they cross over we take a buy signal or a sell signal we'll have a look at those in a second one way of filtering these signals is uh to use the span line to take a buy signal only when the span line is above and take a sell signal off these two lines when the span line is

Below then coming to the cloud with the kumu cloud we can look at uh breakout signals from the cloud there's a sign that the trend is changing that's one way of trading it another way is for looking for a crossover for the cloud the two lines making the cloud to cross over and again a buy signal is stronger when price is above the cloud a sell signal is stronger when prices below the cloud so we have quite a disciplined way of

Trading here if we're going to implement these filters but let's um put this into the real world take a look on the platform and have a look at some of these signals so some of the most simple signals is a crossover for example if we're looking at that baseline in the confirmation line so again we're on the goal chart here we have a crossover down here end of march positive crossover and of course that that lagging span line was above suggesting uh it was a more valid signal

Then we have a crossover just in here we can see and then the most recent signal clearly gold has had a a big run uh at the time of recording from june to late late july the most recent crossover signal was in here and again uh that lagging span indicator was above so if we were using that as a filter um you know that did well in confirming that as a valid bicycle let's take a look at a different market so we're looking at a daily chart of the nasdaq 100 here

With our ichimoku uh on here so so again uh looking at the two crossover lines we've had a great trend anyway uh for us stocks off those march 2019 lows but our buy signal was uh was last down here so it's a way away now but back in back in april still positive but looking at the clouds now let's look at the clouds uh to get our signals so so the rule of thumb is that we don't trade when the market is in the cloud but we can

Trade breakouts and because it acts as dynamic support and resistance so we did get a breakout 14th of april through the cloud the market was above the cloud it's a bullish sign it's broken out it came to retest it we can see here 21st of april the cloud acting as support and then we get the crossover with the two borders of the cloud here in the 22nd of may and since then uh the market stayed above the cloud so again suggesting you know that the positions are bullish let's have another quick

Look at one more market so this is uh pounding against the dollar fair to say this is a bit of a a messier chart we don't have the great big moves so far that we've seen in uh the nasdaq and the price of gold but i think the ichimoku clutch still still bears that and maybe helps us here if we go back to june late may early june we saw the price um breaking out during the fast through the cloud we did get a bit of a run

From that level there the market sold off again it's pulled back into the cloud late june but again we do not want to trade when that when the market's in the cloud as it suggests indecision but again we get a move out of the cloud and a crossover of the cloud the two cloud borders in early july around about what the 124 70 level and since then the price has moved a few hundred points higher and you've seen that cloud

Has acted as fairly good support over the last couple of weeks or so so i think it can take a bit of getting your head around no indicator is perfect all the time but as a visual way of looking at dynamic support and resistance i definitely think issue mocking charts um could help quite a few of us when it comes to trading that's it for our quick introduction on issue mockery charts if you have our platform you can try it out i hope you found it useful any questions leave them in the

Comments below but from me davidjones and capital.com we'll wrap things up there good luck with your trading for more trading videos just like this please subscribe to our channel

Related Videos

from daily forex this is chris taking a look at the uh bitcoin market here you can see that we have uh found the market to be bullish we have broken above the ...
James fake revenue at deutsche bank has risen by 47 in the third quarter has this good momentum continued in the fourth quarter as well look we're continuin...
from daily forax this is chris taking a look at the um us stock indices this is the s p 500 and you can see that the s p 500 has uh rallied quite a bit did pul...
The capital position now and the confidence you have to deploy that dividend well indeed we have uh we've had a uh a very strong quarter um in which uh you ...
Hi everyone my name is adita and a few years ago i got divorced and became a single mom of two kids and that's when i started to look for ways to invest my ...
Have you ever thought of the true value of gold I mean really the value of something isn't its price it's what you can buy with it that is the true valu...
Hi this is vlad from effects empire euro dollar failed to settle above the resistance at 1.1870 and is trying to get below the support at 1.1830 if this attempt...
from daily forex this is chris taking a look at the uh crude oil marking cwti has gapped a little bit lower and then basically did nothing so uh at this point ...
Rupert what does this all mean for for equities but in general actually asset classes would you buy right now yeah so we are still broadly constructive on risk ...
Today I'm looking back at the Tesla stock on March 17th I did an analysis based on my ambassador diamond analysis the IDB a and I suggested that after its s...
The thing is if it's a legitimate expense and you are legitimately working from home take it you're literally throwing money leaving money on the table ...
from fx empire this is chris taking a look at the euro dollar and you can see that we are reaching above 118 as new york gets on board and perhaps trying to ma...
from daily forex this is chris taking a look at the euro and the pound you can see the euro has fallen a bit during the trading session here on friday as there...
The crude oil price has had a great recovery off those april lows but it does appear to be struggling over recent weeks so given the resurgence of the coronavir...
The recovery in silver continued into july and in the last week uh the price went somewhat parabolic moving from 19 up to 26 and you can see the sort of volatil...
Now one of the things that almost all millionaires have in common is they have exceptional I mean exceptional communication skills because they recognize that c...
Hi this is vlad from effects empire silver is currently trying to settle above the nearest resistance level at 23.30 if this attempt is successful silver will g...
from daily forex this is chris taking a look at the gold and silver markets you can see gold has smashed into this little short-term downtrend line that i have...
So tell us a bit more about the survey what what are your clients telling you about the lessons learned from this pandemic and what does it tell us about the fu...
At first glance ichimoku charts um can seem somewhat intimidating with a lot going on when we're looking at markets but they're also a really powerful w...