How To ACTUALLY Use The Ichimoku: The Most Profitable Ichimoku Cloud Strategy

Summary

The Ichimoku Cloud indicator is a versatile tool for traders to identify market trends, support and resistance zones, and entry signals. Despite its complexity due to multiple components, understanding its five lines—conversion, base, leading spans A and B, and lagging span—can simplify its use. The indicator projects signals into the future and can replace the need for multiple indicators. A thick cloud signifies a strong trend, while a thin one indicates weakness. Proper use involves confirming signals across components for reliable trading decisions.

Takeaways

• 📊 Ichi-moku cloud indicator is a comprehensive tool that can show market trends, support and resistance zones, momentum, and entry signals, even projecting these into the future.
• 🤔 Many traders underutilize the ichi-moku due to its complexity, but mastering it can reduce the need for multiple indicators on a chart.
• 📈 The indicator consists of five lines: the conversion line, base line, leading span A, leading span B, and lagging span, each with a specific role in analyzing market conditions.
• 🔄 The conversion line represents short-term price momentum by showing the mid-point of the highest and lowest prices over the last nine periods.
• 📉 The base line indicates medium-term price momentum, plotting the mid-point price of high and lows over the last 26 periods.
• 🌐 The ichi-moku cloud, or kumo, is a unique component that projects itself into the future, providing insight into future support and resistance levels.
• 🟢 A green cloud, formed when leading span A crosses above leading span B, signals an uptrend, while a red cloud indicates a downtrend.
• 🔍 The lagging span helps identify trends by comparing current price action with past price action, 26 periods behind the last candlestick.
• 🌀 The thickness of the ichi-moku cloud can indicate the strength of the trend; a thin cloud suggests a weak trend, while a thick cloud indicates a strong trend.
• 🚫 Entering positions should not be based solely on the ichi-moku cloud; multiple components of the indicator should signal a trend change for a stronger signal.
• 💡 The ichi-moku indicator has built-in components to verify and validate its own signals, making it a self-contained and versatile tool for traders.

Q & A

What is the Ichi-moku Cloud Indicator?

The Ichi-moku Cloud Indicator is a popular technical analysis tool used by traders to identify trends, support and resistance zones, market momentum, and potential entry points for trades.

Why do some traders find the Ichi-moku Cloud Indicator overwhelming?

Traders may find the Ichi-moku Cloud Indicator overwhelming due to its multiple components, which include five lines and the Ichi-moku cloud, each providing different signals and requiring a comprehensive understanding to use correctly.

What are the five components of the Ichi-moku Cloud Indicator?

The five components are the conversion line, base line, leading span A, leading span B, and lagging span.

How does the conversion line reflect market momentum?

The conversion line shows the mid-point of the highest and lowest prices of an asset over the last nine periods, indicating short-term price momentum. When the price is above the conversion line, the short-term market momentum is bullish, and bearish when below.

What is the purpose of the base line in the Ichi-moku Cloud Indicator?

The base line is used to spot mid-term trends, support zones, resistance zones, and market momentum. It plots the mid-point price of the high and lows over the last 26 periods, offering mid-term support to the price action.

How does the Ichi-moku cloud, or kumo, project signals into the future?

The Ichi-moku cloud, consisting of leading span A and leading span B, projects itself into the future, providing indications of future support and resistance levels.

What does the color of the Ichi-moku cloud signify?

The color of the Ichi-moku cloud indicates the trend direction. A green cloud (leading span A above leading span B) signifies an uptrend, while a red cloud (leading span B above leading span A) signifies a downtrend.

How does the lagging span contribute to the Ichi-moku Cloud Indicator?

The lagging span shows the closing prices 26 periods behind the last candlestick, helping to identify trends and similarities in current price action with past price action.

What is the significance of the thickness of the Ichi-moku cloud?

The thickness of the Ichi-moku cloud indicates the strength of the trend. A thin cloud suggests a weak trend, while a thick cloud indicates a strong trend.

How can the Ichi-moku Cloud Indicator be used to enter into profitable positions?

The Ichi-moku Cloud Indicator can be used to enter into profitable positions by looking for confirmations from multiple components, such as the conversion line, base line, and lagging span, in conjunction with the color and thickness of the cloud.

What is the role of the stoploss and takeprofit in trading using the Ichi-moku Cloud Indicator?

In trading using the Ichi-moku Cloud Indicator, the stoploss is placed slightly below the most recent support zone to limit potential losses, and the takeprofit is set at a 2 times risk-to-reward ratio to maximize potential gains.

Outlines

00:00

📈 Introduction to Ichimoku Cloud Indicator

This paragraph introduces the Ichimoku Cloud indicator, a versatile tool used by traders to analyze market trends, support and resistance zones, momentum, and entry signals. Despite its popularity, many traders struggle with its complexity due to its multiple components. The indicator can project signals into the future and reduce the need for multiple indicators on a chart. It consists of five lines: the conversion line, base line, leading span A, leading span B, and lagging span. The conversion line represents short-term price momentum, while the base line indicates medium-term momentum. The Ichimoku Cloud, or 'kumo,' is a prominent feature that projects into the future to show potential support and resistance levels. The lagging span compares current price action with past trends. The thickness of the cloud indicates the strength of the trend, with a thin cloud suggesting a weak trend and a thick one indicating a strong trend. The paragraph emphasizes the importance of using the indicator's components together to validate signals for profitable trades.

05:03

🤑 Utilizing Ichimoku for Profitable Trades and Broker Recommendation

The second paragraph focuses on applying the Ichimoku Cloud indicator to enter profitable trading positions and briefly mentions Hankotrade as a broker with low commissions and spreads, offering a Matching Deposit Bonus for new accounts. The paragraph provides a step-by-step guide on how to add and customize the Ichimoku indicator on a trading chart, emphasizing the importance of confirming signals from multiple components for stronger trading signals. It describes scenarios for entering long positions when the price is above key lines and the cloud indicates a bullish trend, as well as using the lagging span for additional confirmation. The paragraph also covers entering short positions when the price and cloud signals align to indicate a bearish trend. The video script encourages viewers to use the indicator's components to verify and validate signals before entering trades, aiming to demonstrate the Ichimoku indicator's utility in various trading scenarios.

Keywords

💡Ichi-moku Cloud Indicator

The Ichi-moku Cloud Indicator is a technical analysis tool used by traders to identify trends, support and resistance zones, and potential entry points in the market. It is a versatile indicator that combines multiple components to provide a comprehensive view of the market's direction. In the video, it is emphasized that understanding and using this indicator correctly can replace the need for multiple indicators, allowing traders to focus on profitable trades.

💡Components

In the context of the Ichi-moku Cloud Indicator, 'components' refers to the five lines that make up the indicator: the conversion line, base line, leading span A, leading span B, and lagging span. Each line serves a specific purpose in analyzing market trends and momentum. The video script explains the function of each component and how they collectively contribute to the overall analysis provided by the indicator.

💡Conversion Line

The conversion line is one of the components of the Ichi-moku Cloud Indicator, representing the midpoint of the highest and lowest prices of an asset over the last nine periods. It is used to gauge short-term price momentum. In the script, it is mentioned that when the price is above the conversion line, the short-term market momentum is bullish, and vice versa when the price is below it.

💡Base Line

The base line is another component of the Ichi-moku Cloud Indicator, similar to the conversion line but reflecting medium-term price momentum over the last 26 periods. It provides support zones and indicates market bias. The video script illustrates that a price above the base line suggests a bullish market, while a price below indicates a bearish market.

💡Leading Span A and B

Leading Span A and B are parts of the Ichi-moku Cloud, also known as the kumo cloud. These lines project into the future, offering indications of future support and resistance levels. When Leading Span A (the green line) crosses above Leading Span B (the red line), it signals an uptrend, and the opposite indicates a downtrend. The video explains how these lines help in identifying the market trend direction.

💡Lagging Span

The lagging span is the component of the Ichi-moku Cloud Indicator that shows the closing prices 26 periods behind the last candlestick. It helps to identify trends by comparing current price action with past price action. The script mentions that if the price is below the lagging span, it indicates a bullish trend, and if above, it usually indicates a bearish trend.

💡Market Momentum

Market momentum refers to the rate of change in the price of an asset and is a key concept in the video. The Ichi-moku Cloud Indicator's components, such as the conversion line and base line, reflect the momentum. The script explains that when the price is above these lines, the momentum is bullish, indicating an upward trend, and bearish when below, indicating a downward trend.

💡Support and Resistance Zones

Support and resistance zones are price levels at which it is expected that the price will have a high likelihood of stopping and reversing. In the video, the Ichi-moku Cloud Indicator is used to identify these zones, which are crucial for determining entry and exit points in trades. The script illustrates how the components of the indicator help in spotting these zones.

💡Profitable Entry Signals

Profitable entry signals are indications that suggest a good time to enter a trade with a high probability of profit. The Ichi-moku Cloud Indicator provides these signals by combining its components' analysis. The video script explains how the indicator's signals can be used to enter into profitable trades by confirming trend changes and market momentum.

💡Trend Direction

Trend direction is the overall direction in which the price of an asset is moving, either up or down. The Ichi-moku Cloud Indicator is used to determine the trend direction by analyzing the positions and interactions of its components. The video script discusses how the indicator can show the trend direction and how traders can use this information to make informed trading decisions.

💡Hankotrade

Hankotrade is mentioned in the video script as a broker with low commissions and spreads, suitable for trading Forex, indices, commodities, or crypto. It is highlighted as a promotional offer with a Matching Deposit Bonus for new account openings. While not directly related to the Ichi-moku Cloud Indicator, it is presented as a resource for traders who might be looking for a trading platform.

Highlights

The ichi-moku cloud indicator is a popular tool among traders, yet many do not use it correctly due to its complexity.

Correct use of the ichi-moku indicator can reveal market trend direction, support and resistance zones, market momentum, and entry signals.

The indicator projects signals into the future, offering versatility by reducing the need for multiple indicators on a chart.

The ichi-moku cloud consists of five lines: the conversion line, base line, leading span A, leading span B, and lagging span.

The conversion line represents short-term price momentum and can act as short-term support.

When the price is above the conversion line, the short-term market momentum is bullish; below it indicates bearish momentum.

The base line reflects medium-term price momentum and offers support similar to the conversion line.

The ichi-moku cloud, or kumo, is the most prominent part of the indicator, projecting itself into the future for support and resistance levels.

A green ichi-moku cloud indicates an uptrend when leading span A crosses above leading span B.

A red leading span B crossing above the green leading span A indicates a downtrend.

The lagging span shows closing prices from the past to identify trends and similarities with current price action.

A thick ichi-moku cloud indicates a strong trend, whereas a thin cloud suggests a weak trend.

Entering a position should be based on multiple components of the indicator signaling a trend change.

The indicator has built-in components to verify and validate its own signals, making it unique among others.

Hankotrade is promoted as a broker with low commissions and spreads, offering a Matching Deposit Bonus for new accounts.

The video demonstrates how to add the ichi-moku indicator to a chart and adjust its settings for better visibility.

The video provides examples of using the ichi-moku indicator to enter into profitable positions with proper risk management.

Transcripts

The ichi-moku cloud indicator is extremely popular, and yet many traders still don’t

use it correctly.

This is because the indicator has many components that can overwhelm traders.

However, if you use the indicator correctly it can show you the trend direction of the

market, support zones, resistance zones, the market momentum, and profitable entry signals.

the indicator even projects these signals into the future, showing us future predictions.

This makes the indicator extremely versatile, meaning that you won’t need to have 5 indicators

on the chart, instead, you can become extremely good at using the ichi-moku by learning how

the indicator works so that you can use it correctly to enter into profitable trades.

Now that we have gotten that out of the way let's start.

The ichi-moku cloud indicator is actually a really uncomplicated indicator if you understand

it’s components, the components of the indicator consists of 5 lines.

The conversion line, base line, leading span A, leading span B and lagging span.

The first component we mentioned is the conversion line.

this line shows the mid-point of the highest and lowest prices of an asset over the last

nine periods.

This means that the line can show us an asset's short-term price momentum.

Here we have added the conversion line to the chart.

As you can see the line mostly offers short-term support.

Like we previously mentioned we can also see that the line reflects the momentum of the

market, whenever the price is trading above the conversion line we see that the short-term

market momentum is bullish.

The opposite is true when the price is trading below the conversion line.

Whenever this is the case the short-term price momentum is bearish.

As you can see the indicator can’t be used well on it’s own since it only shows short-term

trends, so let’s take a look at the components that have been combined with the conversion

line.

A component to spot mid-term trends, support zones, resistance zones, and market momentum

is the baseline.

The baseline is very similar to the conversion line, however as you can see here instead

of showing short-term price momentum it shows longer, medium-term price momentum.

This is because the baseline plots the mid-point price of the high and lows over the last 26

periods.

If we take a look at the baseline we also see that it acts the same way as the conversion

line, offering mid-term support to the price action.

We also see that whenever the price is above the baseline the market will have a bullish

bias and whenever the price is below the baseline the market has a bearish bias.

The ichi-moku cloud, also known as the kumo cloud is the most prominent component of the

indicator, The component also consists of the Leading span A, which is the green line,

and the leading span B which is the red line.

unlike many other indicators this cloud projects it’s self into the future.

This allows you to get an indication of future support and resistance levels.

Whenever the leading Span A, crosses above the leading span B, the ichi-moku cloud turns

green indicating that the trend has switched to an uptrend.

The opposite is true whenever the red Leading span B line crosses above the green leading

span A line, this indicates a downtrend.

The last component of this indicator is the lagging span, which shows the closing prices

26 periods behind the last candlestick.

Using this indicator you can spot similarities in the current price action with past price

action.

By using the lagging span you can also spot trends in the market.

Whenever the price is trading below the lagging span it indicates that there is a bullish

trend in the market and whenever the price is trading above the lagging span there is

usually a bearish trend playing out.

The most common way of reading the ichi-moku cloud is by looking at the thickness of it.

If the cloud is thin this indicates that there is a weak trend, however, if the cloud is

thick it indicates that there is a strong trend playing out.

This way we will also be able to filter out ranging or consolidating markets, from this

we can assume that it’s not a good idea to enter into a position when the price action

occurs within the ichi-moku cloud.

It’s also important to note that the longer the price stays below or above the cloud the

stronger the trend is, and the more resistance or support it will provide.

To enter into a position we will need multiple components of the indicator to signal that

the trend has switched, as you can see here the price crossed below the baseline indicating

that the trend has switched to a bearish trend, however the ichi-moku cloud is green, because

of this the sell signal is weak and it is not recommended to enter into a position based

on it.

Here we see that the price crossed below the baseline, but this time we also see that the

ichi-moku cloud is red, this means that there is now a strong sell signal.

As you can see the same goes for buy signals, whenever the price crosses above the baseline

and the ichi-moku cloud is green the buy signal can be interpreted as strong.

This type of pairing can also be done with other components of the indicator such as

the lagging span.

Thats also what makes the indicator different from others, the ichi-moku has built-in components

to verify and validate it’s own signals.

Now that you know exactly how all of the components work let’s take a look at how we can use

the indicator to enter into profitable positions.

But before that, If you are looking for a broker that has extremely low commissions

and spreads then check out Hankotrade.

The best broker to trade Forex, indices, commodities, or crypto.

They have live chat support so that any questions you may have can be quickly and easily answered.

One of Hankotrade’s most prominent promotional offers is the Matching Deposit Bonus that

can be claimed when you open an account with Hankotrade.

Sign up via the link in the description to register with Hanko-trade and get access to

all of these perks!

Let’s first add the indicator to the chart, head over to the indicator search tab and

search for the ichi-moku indicator.

Select the indicator made by trading view and add it to the chart.

After that navigate to the indicator settings and click on the style tab, we will be changing

the baseline color to white and change the conversion line color to a lighter blue to

make the lines easier to see.

That was all that we needed to do, now let’s take a look at when we will enter into a position.

As you can see here the price is trading above the conversion line indicating that the short-term

trend is currently bullish.

We also see that the price has crossed above the baseline indicating that the mid-term

trend has switched to a bullish trend.

To validate this signal we will first take a look at the ichi-moku cloud.

Firstly, We can see that it’s green because the leading span A is plotted above the leading

span B line.

If we take a closer look at the ichi-moku cloud we also see that the price is no longer

trading inside it.

As you can see here this was the case, indicating that the market was consolidating and that

there was no strong trend showing us that a bullish breakout has also occurred.

Finally we also see that the ichi-moku cloud is thick showing us that this bullish trend

is strong.

Since all of the components we currently have enabled are signaling that this is a valid

buy entry let’s enter into the position.

We will place the stoploss slightly below the most recent support zone. for the takeprofit

we will target a 2 times risk-to-reward ratio.

Now let’s see how the trade plays out.

For the next entry let’s disabled the conversion line and enabled the lagging span.

Here we see that the price has crossed above the baseline, which shows us that there is

a bullish mid-term trend, however, to confirm this signal we will check the other components

of the indicator, this way we can verify the strength of the signal because we don’t

want to enter into positions based on weak signals.

Here we see that the ichi-moku cloud is green and thick indicating that the trend is strong.

As the final confirmation let’s use the lagging span filter, this line shows us the

closing prices 26 periods behind the last candlestick.

This allows us to see similarities between the current market relative to the earlier

market conditions.

If the price is trading below the lagging span then the strength of the signal will

be considered stronger.

As you can see this is the case here.

This means that all of the components of the ichi-moku are indicating that the buy signal

is strong, so we will enter into the buy position.

We will place the stoploss slightly below the most recent support zone. for the takeprofit

we will target a 2 times risk-to-reward ratio.

Now let’s see how the trade plays out.

We can also enter into positions if the color of the ichi-moku cloud isn’t aligned with

the trend.

As you can see here the price is trading below the baseline.

We also see that the price is trading below the coversion line.

Both of these signals indicate a bearish trend, however this time instead of using the ichi-moku

cloud as a confirmation, we will use it as the entry signal.

When the price closes below the red leading span b line we will enter into the position.

As you can see this occurs here, so let’s enter into the position.

We will be placing the stoploss slightly above the most recent resistance point.

For the takeprofit we will target a 2 times risk-to-reward ratio.

Now let’s see how the trade plays out.

As you can see from these entries the ichi-moku indicator can be used in many ways.

I hope this video could showcase some good ways to read and utilize the ichi-moku indicator.

If you enjoyed the video, please leave a like and subscribe to the channel, if you have

any questions feel free to leave a comment.