{"id":155789,"date":"2019-09-20T09:01:40","date_gmt":"2019-09-20T13:01:40","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=155789"},"modified":"2019-09-20T07:35:27","modified_gmt":"2019-09-20T11:35:27","slug":"the-best-trend-trading-indicators-ichimoku-cloud","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2019\/09\/the-best-trend-trading-indicators-ichimoku-cloud\/","title":{"rendered":"The Best Trend Trading Indicators: Ichimoku Cloud"},"content":{"rendered":"
September 20, 2019<\/div>
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By <\/strong>Orbex<\/strong><\/a><\/p>\n

One of the more popular and sophisticated forex indicators is the Ichimoku Kinko Hyo, or Ichimoku.<\/p>\n

Its name describes its function as it translates to \u201cone look equilibrium chart\u201d. It\u2019s a complex combination of calculations that shows you the most important trading information of the forex market in one glance.<\/p>\n

Although it looks really complicated, it\u2019s quite logical in construction and easy to understand. It\u2019s very popular especially among web acting forex analysts.<\/p>\n

This is because aside from being generally useful in pretty much most FX trading scenarios, it also looks really cool! So, here\u2019s how to get the most out of it.<\/p>\n

The Nuts and Bolts<\/strong><\/h2>\n

Ichimoku was developed in the late \u201960s by a journalist, not an FX trader. At the time, forex wasn\u2019t a widespread practice, and the indicator was mostly oriented towards stocks, which\u00a0usually trend in a direction over an extended time.<\/p>

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It works best in forex under similar conditions, in longer-term charts.<\/p>\n

Unlike other forex trading indicators developed after computers, it doesn\u2019t use moving averages. It uses the median between high and low over time.<\/p>\n

This calculation of 9 of the period highs plus 9 of the period, then divided in half (the average) forms the basis of the indicator: the conversion line.<\/p>\n

The Similarities<\/strong><\/h2>\n

From there, using high and low averages instead of a moving average, Ichimoku works similar to most of the other forex indicators. Most notably MACD, by comparing faster (shorter-term) averages to longer-term averages.<\/p>\n

A distinctive feature of the FX indicator is the \u201ccloud.\u201d This is a shaded area that is often in front of the market price. This gives the look that it\u2019s predicting the market\u2019s direction, and is a nice visual aid.<\/p>\n

We do this by displacing the moving high low calculation forward, unlike\u00a0\u201ctraditional\u201d moving averages<\/a>\u00a0that place the line at the current market price.<\/p>\n

How to Read the Ichimoku<\/strong><\/h2>\n

The basic idea is to identify the trend. When the market price is above the cloud, it\u2019s trending upwards. When it\u2019s below the cloud, it\u2019s trending downwards.<\/p>\n

Because it doesn\u2019t use a single cross-over line, the argument is that\u00a0Ichimoku<\/a>\u00a0gives a stronger reading of the trend. Of course, when the trend reverses, the price action has to move towards the cloud before crossing through it and showing the new trend.<\/p>\n

Generally, when the trend is upwards, the cloud is plotted as green. When the trend is downwards, it\u2019s red.<\/p>\n

The Other Information<\/strong><\/h2>\n

Signals generate when price action emerges from the cloud. So, a buy when it moves above, and a sell when it goes below.<\/p>\n

We see this as an indication of a new trend being created. Note that the periods Ichimoku uses are the same as those that MACD uses. The latter also employs a crossover pattern to indicate a new trend formation.<\/p>\n

Forex traders often use the \u201cforward\u201d projection of the cloud to determine support and resistance levels. This depends on the market\u2019s direction, though. The logic here is that the cloud represents the \u201carea of uncertainty\u201d in which the trend is more likely to switch direction.<\/p>\n

So, if the price action has moved through the cloud, you can be sure that the market has moved beyond its support or resistance level.<\/p>\n

The Indicator<\/strong><\/h2>\n

Ichimoku is a good, all-round\u00a0forex indicator.<\/a>\u00a0It shows the trend, support and resistance levels as well as market momentum. It\u2019s a great tool to get a quick understanding of the market.<\/p>\n

But, unlike what it was designed to do, it\u2019s always better to have at least two indicators when trying to read the forex market. But probably not\u00a0the MACD because of the similarities between the two!<\/a><\/p>\n

By <\/strong>Orbex<\/strong><\/a><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By Orbex One of the more popular and sophisticated forex indicators is the Ichimoku Kinko Hyo, or Ichimoku. Its name describes its function as it translates to \u201cone look equilibrium chart\u201d. It\u2019s a complex combination of calculations that shows you the most important trading information of the forex market in one glance. Although it looks […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-155789","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/155789","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=155789"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/155789\/revisions"}],"predecessor-version":[{"id":155802,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/155789\/revisions\/155802"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=155789"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=155789"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=155789"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}