3/21/2021 0 Comments Ichimoku Cloud Stocks
It is the Senkou Span lines that form the borders of the cloud.When Senkou Span A is above Senkou Span B, the shade of the cloud is usually green; and when Senkou Span B is above Senkou Span A, the shade of the cloud is usually red.A green cloud indicates a bullish trend, whereas a red cloud indicates a bearish trend.There is also bullish sentiment when prices are above the cloud and bearish sentiment when prices are below the cloud; prices within the cloud indicate a neutral market stance.
![]() As stated above, cloud borders are computed as moving averages. It is, therefore, important to watch for crossovers of the Senkou Span lines (or simply changes in the colour of the cloud), which indicate trend reversals. Because Senkou Span lines are projected into the future, they also act as potential dynamic support and resistance lines depending on where the price lies. As the baseline, Kijun Sen is an indicator for future price action and literally acts as a price magnet. A strong bullish signal occurs when the price is above a Kijun Sen line that is also above the cloud; whereas a strong bearish signal occurs when the price is below a Kijun Sen line, that is also below the cloud. Its slope shows the market trend, and when it moves sideways, it signals a ranging market. But this is very important in putting the current price action into context. A buy signal is generated when the Chikou Span crosses the price from below, while a sell signal is produced when the Chikou Span crosses the price from above. Chikou Span crosses with Kijun Sen and Tenkan Sen can also provide confirmation signals for buy and sell orders. Still, it can be complemented with other tools to deliver low risk, high probability trading signals. For instance, when prices are above the cloud, traders can watch out for bullish Kijun Sen and Tenkan Sen crosses at important Fibonacci levels, such as 38.2 and 61.8. Ichimoku can tell when a market is ranging, and by combining it with oscillators, such as the RSI (relative strength index) and Stochastics, that signal overbought and oversold conditions, traders can pick out optimal entry and exit points in ranging markets. Ichimoku trading signals are effective on any chart timeframe. Trade with the indicator on up to 21 timeframe charts available at AvaTrade. None of the content provided constitutes any form of investment advice.
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