__Trading the Cloud (Part Two)
_
Welcome to Part Two of my ichimoku trading guide – Trading the Cloud. In the first part of the guide I introduced you to the Kumo cloud, sorry it was so short, but I wanted to keep it ‘bite sized’ I think it is easier for you to digest and simpler to teach.
I want to go into a little bit more detail about how price reacts to the Kumo cloud and how this gives the trader a very strong idea on how price is moving, and how you can start to predict future moves and trades just by quickly glancing at the chart.
Ok so this leads me to the next part
Identifying Trend Direction with the Kumo Cloud
learn ichimoku
The first thing we need to know as we look at the ichimoku chart is what direction the price is moving.
Is it Bullish (Moving up) or Bearish (Moving down)
We do this by looking where price is in relation to the Kumo Cloud
If price is above the cloud then the sentiment is Bullish, if price is below the sentiment is Bearish.
Take a look at this chart below
http://ichi-mo-ku.com/trading-cloud-part-2
As you can see from the chart, it is easy to tell ‘at a glance’ whether price is in a bullish mood or a bearish mood.
This is the foundation of trading ichimoku and should be the first thing you look for before anything else. knowing the direction of the price tells you what type of trades to look out for.
Bullish price = Only look for BUY trades, ignore any SELL trade oppertunitys
Bearish price = Only look for SELL trades, ignore and BUY trade opportunities
Knowing the direction of the trend is vital for traders, as straight away we can filter out ANY fake signals and concentrate on the stronger moves. By only looking for BUY or SELL trades at any one time, we already save a lot of analysis, and it literally takes one glance at the chart to tell us if we are looking for BULLISH trades or BEARISH trades.
Kumo Breakout
Every new trend starts with a Kumo breakout.
Before price can be trending on either side of the Kumo, it must break out of the Kumo Cloud, every time price breaks from the cloud, it starts a new trend and tells us what type of signal to look out for.
Bullish trend = BUY signals
Bearish Trend = SELL signals
kumo cloud
Take a look at this chart below
http://ichi-mo-ku.com/trading-cloud-part-2
As you can see from the chart price enters the Kumo from the top then moves around inside the Kumo cloud until it finally breaks out of the bottom, thus creating a Bearish trend.
The Kumo breakout is actually a trading strategy in itself, where you can open a trade as soon as price breaks the cloud, but I will cover this when I talk about the ichimoku trading strategies in future updates.
You will notice there are times when price is stuck inside the cloud, this is an area of no trend and is advised to stay away from opening any trades until a clear trend is presented by a breakout on either side.
I will cover this more in the next lesson.
Until Next Time
ichimoku
Welcome to Part Two of my ichimoku trading guide – Trading the Cloud. In the first part of the guide I introduced you to the Kumo cloud, sorry it was so short, but I wanted to keep it ‘bite sized’ I think it is easier for you to digest and simpler to teach.
I want to go into a little bit more detail about how price reacts to the Kumo cloud and how this gives the trader a very strong idea on how price is moving, and how you can start to predict future moves and trades just by quickly glancing at the chart.
Ok so this leads me to the next part
Identifying Trend Direction with the Kumo Cloud
learn ichimoku
The first thing we need to know as we look at the ichimoku chart is what direction the price is moving.
Is it Bullish (Moving up) or Bearish (Moving down)
We do this by looking where price is in relation to the Kumo Cloud
If price is above the cloud then the sentiment is Bullish, if price is below the sentiment is Bearish.
Take a look at this chart below
http://ichi-mo-ku.com/trading-cloud-part-2
As you can see from the chart, it is easy to tell ‘at a glance’ whether price is in a bullish mood or a bearish mood.
This is the foundation of trading ichimoku and should be the first thing you look for before anything else. knowing the direction of the price tells you what type of trades to look out for.
Bullish price = Only look for BUY trades, ignore any SELL trade oppertunitys
Bearish price = Only look for SELL trades, ignore and BUY trade opportunities
Knowing the direction of the trend is vital for traders, as straight away we can filter out ANY fake signals and concentrate on the stronger moves. By only looking for BUY or SELL trades at any one time, we already save a lot of analysis, and it literally takes one glance at the chart to tell us if we are looking for BULLISH trades or BEARISH trades.
Kumo Breakout
Every new trend starts with a Kumo breakout.
Before price can be trending on either side of the Kumo, it must break out of the Kumo Cloud, every time price breaks from the cloud, it starts a new trend and tells us what type of signal to look out for.
Bullish trend = BUY signals
Bearish Trend = SELL signals
kumo cloud
Take a look at this chart below
http://ichi-mo-ku.com/trading-cloud-part-2
As you can see from the chart price enters the Kumo from the top then moves around inside the Kumo cloud until it finally breaks out of the bottom, thus creating a Bearish trend.
The Kumo breakout is actually a trading strategy in itself, where you can open a trade as soon as price breaks the cloud, but I will cover this when I talk about the ichimoku trading strategies in future updates.
You will notice there are times when price is stuck inside the cloud, this is an area of no trend and is advised to stay away from opening any trades until a clear trend is presented by a breakout on either side.
I will cover this more in the next lesson.
Until Next Time
ichimoku