by I’ve seen many articles on websites about the Ichimoku cloud strategy and most of them are too long they have too much complicated terminology and I think they’re going to turn off a lot of people and so I wanted to present something very quick and simple.
It’s really simple just an introduction to Ichimoku cloud strategy. Here we go let’s talk about it so this is the Nifty Index daily price chart and I wanted to use this as an example and all these candlesticks represent each candlestick represents one day of price action for yahoo stock.
Ichimoku Cloud trading Strategy
This is the Ichimoku cloud strategy and as you can see sometimes it’s green sometimes it’s red and you notice that the cloud actually goes beyond the current day’s price action and we’ll talk about that later so if the current price is above the cloud-like it is here the current candlestick is above the cloud then the direction is considered up and that’s considered bullish.
Ichimoku Cloud Strategy with Example
If the current price is below the cloud-like it is for these candlesticks they’re all below the cloud then the direction is down and that’s considered a bearish sign also if the cloud is currently green like for example this is today’s candlestick and today the cloud is green then the direction again is up and that’s considered bullish.
If the Ichimoku Cloud Strategy is currently red like on this day, for example, the cloud is colored red then the direction is down and that’s considered bearish so for example if you look at candlestick it’s below the cloud that’s considered bearish and the cloud itself is red and that’s also considered bearish you can prefer below chart.
If you look at this candlestick on this day in December the current candlestick is below the cloud and that’s considered bearish and the cloud itself is colored was colored red on this day and so that’s also a bearish sign now what about the rest of these lines well in addition to the general direction of the price action levels can also be interpreted as levels of support and resistance and that includes all five of these lines here one two three four five because these two lines that form the Ichimoku Cloud Strategy are themselves useful as support and resistance lines.
In addition to these three other lines here when the current price is above the various lines on the chart those lines are considered levels of support, for example, these candlesticks here are all above the lines and so this would be the first level of support and this would be the next one and then this would be the next one and this would be the next one.
When the current price is below the various lines on the charts those lines are considered levels of resistance so for example these candlesticks here are below the lines and so the first level of resistance would be here and the next one will be here than this one and then this one and then this one.
The two lines that form the Ichimoku Cloud Strategy itself are often considered to be the strongest support and resistance levels. so it’s a big deal when the price breaks out of the cloud.
For example, this candlestick right here would have this line as the strongest resistance level and this line as the strongest support level, and when it broke out when it broke through this strong resistance level here as you can see it just went up and up and up.
That’s a sign when it breaks out like that now what about over here well on the standard settings the cloud projects support and resistance levels 26 days ahead of the current price if this is today’s price then as you can see the cloud itself projects 26 days beyond today’s candle.
Conclusion
It provides interestingly enough future support and resistance which not a lot of indicators do and so I think that’s pretty cool alright so this was just an introduction but I wanted to strip away all the complicated terminology and just give a brief introduction so that you can pursue further education on your own so if you found this to be helpful share this article.
Ichimoku Cloud Strategy for day trading is usually the best trading strategy to take the trade. This setup is very easy and simple to use just you need to keep patience and let your setup form and then you can enter your positions. Stoploss should be the low or high of the inside bar candle for uptrend and downtrend and the target would be as per your risk-reward ratio. One should follow the Risk Management, Money Management, and Fear and Greed concept of the market to avoid big losses.
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