ichimoku cloud

[kineticscott]

Hi,

New to the board here and have recently heard of the "ichimoku cloud" at freestockcharts. It doesn't seem to be available at etrade and I'm wondering if anyone has any experience with it. It seems to be popular in Japan...

Thing about this indicator is that it's not just real-time, but also future.


Thanks!

[DogDayTrader]

Nice find, the website has a nice polish. I have heard of people using two of the lines as buy/sell indicators but can't remember which lines they were. My initial impression of the chart was that it is confusing but must say the prediction thing does intrigue me. I'll keep you updated if I find some good sights that explain how to read this beast.

[DogDayTrader]

Hi,

New to the board here and have recently heard of the "ichimoku cloud" at freestockcharts. It doesn't seem to be available at etrade and I'm wondering if anyone has any experience with it. It seems to be popular in Japan...

Thing about this indicator is that it's not just real-time, but also future.


Thanks!

Just an update, stockcharts.com also has a cloud indicator. IMO the site is one of the best charting sites on the web. However I should mention that I only use the free ones, $21.95 a mo. seems kinda steep.

[TheStockDude]

I found this explination on traderslog.com:

This indicator was developed so that a trader can gauge an asset's trend, momentum and support and resistance points without the need of any other technical indicator.

1) Tenkan-Sen = Conversion Line = (Highest High + Lowest Low) / 2, for the past 9 periods (Blue Line)

2) Kijun-Sen = Base Line = (Highest High + Lowest Low) / 2, for the past 26 periods (Red Line)

3) Chikou Span = Lagging Span = Today's closing price plotted 26 periods behind (Light Blue Line)

4) Senkou Span A = Leading Span A = (Tenkan-Sen + Kijun-Sen) / 2, plotted 26 periods ahead (Green)

5) Senkou Span B = Leading Span B = (Highest High + Lowest Low) / 2, for the past 52 periods, plotted 26 periods ahead (Yellow)

The area between Senkou Span A and B called the Kumo, or cloud.

Ichimoku is very similar to moving average studies. And like moving averages, buy and sell signals are given with the crossover technique.

A bullish signal is issued when the Tenkan-Sen (blue line) crosses the Kijun-Sen (red line) from below. Conversely, a bearish signal is issued when the Tenkan-Sen crosses the Kijun-Sen from above.

If a bullish crossover occurs and the current price was trading above the Kumo (or cloud), this would be considered a very strong buy signal. If there was a bearish crossover signal and the price, at that time of the crossover was trading below the Kumo, this would be considered a very strong sell signal.

A normal buy or sell signal occurs if the price was trading within the Kumo when the crossover took place.

A weak buy signal would be issued if there was a bullish crossover that occurred while the price was trading below the Kumo.

Ichimoku charting also identifies of support and resistance levels using the Kumo. The Kumo can also be used to help identify the prevailing trend of the market. While the price is above the Kumo, the prevailing trend is said to be up and below it the prevailing trend is said to be down.

If the price is above the cloud, its upper line forms the first support level, and the second line above forms the second support level.

If the price is below cloud, the lower line forms the first resistance level, and the upper line forms the second level.

If the Chinkou Span line traverses the price chart in the bottom-up direction it is signal to buy. If the Chinkou Span line traverses the price chart in the top-down direction it is signal to sell.

The Chikou Span can also be used to determine the strength of the buy or sell signal. If the Chikou Span was below the closing price and a sell signal was issued, then the strength is with the sellers, otherwise it is a weak signal. Conversely, if there was a buy signal and the Chikou Span was above the price, then there is strength to the upside, otherwise it can be considered a weak buy signal.






This link explains the different typs of signals the chart gives with plenty of examples:

Using the Ichimoku Cloud

[DogDayTrader]

That's some nice stuff StockDude

[TheStockDude]

Thanks. I really like using the chart as seconday and tertiary confirmations. I have applied the Ichimoku Cloud indicators to COOL. The description can be found here:

http://www.favstocks.com/forum/techn....html#post3664