Ichimoku Kinko Hyo + Volume Part II

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Ichimoku Kinko Hyo + Volume Part II

In my previous article I talked about Ichimoku Kinko Hyo basic things and I explained how many traders use this indicator. You can see that you can identify break outs, trends, supports and resistances and crossovers. In this article I will tell how I use Ichi with volume spread analysis and price action. You could have some good signals with the above but I believe that it’s not “a stand alone indicator”. Like every indicator, of course. I use it mostly to identify the general picture of the market. If it’s bullish or bearish. After that If a signal will appear I am trying to confirm this with volume and price action. If there is confluence between them I am going to take a trade. So, it’s time for the first screen shot of the day.

This chart is from EURUSD currency pair and I use Ichimoku Kinko Hyo, Price Action and volume spread analysis. First of all, look at the price behavior from the beginning of the screen shot. It was below the cloud then came above and made a high. After that moves down and it’s trying to break the cloud but it can’t and makes a support. Then makes a new high lower than the previous. This is our first price action signal. We have a lower high. Notice the red trend line which I drew. Then the price is moving down again. Will it break the support or not? It’s the time of volume spread analysis now. Notice that the kijun(blue line) is above the tenkan(red line). Look at the blue box in the volume. There is an increasing volume and the price is moving down slowly. In this case I am going to take a put. Look at the next candle. It’s negative and the price is moving down very fast. In our volume indicator a big white candle appears. This means that the investors are selling heavily right now. Our prediction was right.

In the second chart (EURUSD currency pair) I want to show you how volume can protect you and help you to filter some false signals. Look at the blue box. The price broke the Kumo and the Kijun is above the tenkan. It seems like a good opportunity for a put but it isn’t. Look at the volume. We don’t have an increasing volume , we have a stable and low volume. This means that we shouldn’t expect a big move in the market right now. The market is ranging and if you remember I told you so in the first article, Ichimoku works better in trending markets. So, don’t take a trade in this case.

Ichimoku Kinko Hyo + Volume

Today I am going to explain you what is Ichimoku Kinko Hyo and how to trade it. Moreover, I will show you how I trade a combination of Ichimoku Kinko Hyo with volume spread analysis as I said in my previous articles. Ichimoku is an indicator and there is in every platform. So, just look for it in the indicator’s list and drop it to your chart. First of all, take a look in the first screen shot about how this indicator look like.

This chart is from EURUSD currency pair and I use only the Ichimoku and the Better Volume Indicator. I am working in a 5min chart. The first thing you will notice it’s obviously the cloud. This is Kumo. The upper line of Kumo is senkou span A and the other one the senkou span B. The blue line which look like a moving average is the Kijun and the red one the tankan. Last, the green one is the chinkou. So, the whole thing is the “Ichimoku Kinko Hyo”. Maybe you are confused right now but I am going to explain how this complicated thing is a very strong tool for the technical analysis.

There are many theories and trading systems around this indicator and I will tell you the basics and how I use this with volume and price action. First of all, you should know that Ichimoku works better in trending markets and If you are able to catch a trend from the beginning in financial products like Spread Bets, Spot Forex you will earn good money. You can also use it in Binary Options but I recommend longer expiries.

If the price is above the Kumo there is a bullish activity in the market and an up-trend. If the price is below the Kumo there is a bearish activity in the market and a down- trend. Some traders are waiting for a Kumo’s break. Maybe, it will be the beginning of a new trend. Take a look.

In the first blue box the price broke the Kumo and we have an up- trend. In the second blue box the price broke the Kumo (senkou B) and we have a mini- down trend.

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Another theory for the Ichimoku is about the Tenkan- Kijun Crossovers. When the tankan(the red) is above the Kijun(the blue) we have a bullish market. On the other hand when Kijun is above Tenkan there is a bearish market. So, with a crossover of these two we can take long or short signals.

In this screen shot you can see a crossover and after it the Kijun is above so we have a short signal.

Some traders use Ichimoku to identify supports and resistances. Many of them use the chinkou as a S&R. Notice the above chart, some minutes before the blue box. The price is moving down and the chinkou(the green one) acts as a support. Other traders, use the Kumo lines (senkou A and B) as S&R especially when the price fails to break the kumo the first time and it creates a S&R inside the Kumo.

I’m around in the forum so any questions hit me up there!

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