Wish to make money while trading online in the stock market? Whenever you buy stock it goes down and the moment you sell, it moves upward. Does it happen to you too? Most probably you are trading in a vacuum without having any direction. Directionless trading leads you to make a loss and never able to earn from stock markets. You can trade using Ichimoku Cloud indicator and easily track the trends and trading signals.
About Ichimoku Cloud
Ichimoku Cloud is one of the simplest and reliable indicators for technical analysis of any stocks. It helps you to define support and resistance level, stock trends and easily generates trading signals. Furthermore, you can also minimize your losses by putting Stop Loss at the key support and resistance levels.
Ichimoku cloud consists of mainly 6 components which are mentioned below:
- Tenken-Sen Line also known as Conversion Line and is indicated by a blue line in the chart.
- Kinjun-Sen Line often called as Base Line and track by a red line.
- Senkou Span A (Boundary A of the cloud) is the upper boundary of the cloud.
- Senkou Span B (Boundary B of the cloud) is the lower boundary of the cloud.
- Kumo is the Cloud
- Chikou Span Line (Lagging Indicator) indicated by a green line.
Ichimoku cloud form after calculating, all the above six components.
How To Trade Using Ichimoku Cloud and Identify Trends
You can consider a trend to be an uptrend if the stock is trading above the green cloud(Kumo). If such kinds of pattern form, then you can consider the stock is strongly bullish. On the other hand, a trend will be a downside if your stock is trading below the red color cloud and you can assume it as strongly bearish.
Ichimoku Cloud also helps you to identify key support and resistance levels. You can easily find out the support and resistance levels whenever a stock breakout and trend changes. If you found your stock price is trading below the Ichimoku cloud then it will act as a resistance level. In case if the stock price is trading above the cloud, it acts as a support level. So, you can easily find whether your stock is bullish or in bearish mode.
Identifying Trading Signal
As you know how to identify trends and also able to locate key support and resistance level. Now you need to find out the trading signals so that you can buy or sell stocks. You will get a buying signal once the Conversion Line crosses and trading above the Base Line. Furthermore, if it happened above the green cloud it is believed to be strongly bullish.
In case, if you found Conversion Line crosses the Base Line and moves downward then a sell signal generated. Also, if it trading below the red cloud then strong bearish signal evolve.
Trade using Ichimoku Cloud is an awesome indicator, but before you trade, learn more about this indicator and trade wisely.
I hope you have now the idea of how Ichimoku Cloud help you identify trends, key levels, and trading signals. You can comment below if you like to know more about it.
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Published on: Jun 26, 2017