Ichimoku: Strategies, Setups and What to Watch for

so real briefly the Ichimoku was created it was first published late 60s originally started 1930s the goal of it was to capture the majority of trends capture trending moves the guys created it creatures thought to believed that trending moves is where the most amount of profit is and can be made and, so he comes from a culture in Japan which is tend to be very patient more concerned with efficiency, so they would rather trade less and get more profit per trade and have higher accuracy then trade more in lieu of having more trades less accuracy to try and reach the same goal to them they’re much more about fishing fee and making the most out of each trade and the HMO Co is designed to generally capture 80% of the trade you think about it is that that’s the majority of what you want to catch in a trending move, because the bottom line is the harder parts to make money in a trending environment is the last 10% in the beginning the first 10% of the move the hardest part of a trending moved capture both, because in the beginning it’s hard to actually detect hey this really is a trend and at the end that also takes a little bit of skill as well it takes a lot of skill to really detect the very beginning of a trend in the end of the trend and, so go asada is figuring was, let’s just capture the lion’s share of it, because that’s where really all the money is and, if you look at this last move here that’s pretty much how it plays itself out 80% of the move here in here that’s a good chunk of change right there that’s really you know that’s a little bit easier to make money inside this area than it is to make money inside here inside here and, so that was one of the main goals was to capture trending moves ideally 80% of that particular trend or move the other thing about it is is that it, because it’s very good at picking trends it’s also very good at detecting reversals now in terms of detecting reversals it’s not necessarily trying to pick tops and bottoms per se I use other methods to pick pop tops and bottoms and I can do that pretty easily it’s not too complicated, but it does do a good job picking up reversals through weeding out false signals and weeding out continuation signals, so that when the pair really does reverse it really is saying hey this thing’s done the bottom line is is that the kuhmo structure is based upon previous price action and, so that previous price section can have an influence on future supported resistance, but I wouldn’t use it as a strategy I wouldn’t use it as a major method in fact the correlation I’d probably say is relatively low, but it can happen from time to time which is probably why you’re noticing it I need to explain to those of you that are new the construction of the each omocha clause, so once you understand that then you really understand all of what we’re talking about to some degree or at least you’ll have the seeds to understand or the soil to understand what we’re talking about, so, there are generally four components of each omocha clause that I recognize the fifth one I do not it’s something I don’t recognize I just don’t use it, but the four components are this the first one here is this white line it’s called the tankinson it’s like a price action line of sorts takes the last line periods takes the high and the little F time periods and what does is it averages that, and then it puts it into a price action line this Jenkinson is designed to gauge the underlying momentum of an instrument and, so it gauges the momentum of an instrument and that can be very useful for telling you where it is what’s you know the instruments likely to do how it’s going to respond and, so forth we’ll get a little further into how it actually has an effect upon trading and also each market pop the next line that you see here is called the key Jensen this will translate into trend line and this is designed as pretty much it says society gauge the overall trend of the instrument it’s designed to tell you where the trend is, if it’s contained or not contained, if it’s flat, if it’s climbing, if it’s falling that’s what it’s designed to do as a general gage now that you understand those two the we can start to get into the Kumu itself which is to me the most unique part of the each omocha cloud this camel is the cloud, but it has two components here the first part is this white line here this white line is really you take the red line and you take the white line you divide it in half choose twenty six time periods ahead and it creates that value over there, so that’s the white line over here which has crossed down now it’s kind of interesting that does it, because what it’s doing is what I thought I did is he took the underlying momentum the thing that gauges the underlying momentum for the instrument, and then he takes the underlying gauge for the trend of that instrument, and then he says, halfway in between the momentum and halfway in between the trend we put those two values together we shoot that into the future, because that should represent some sort of gauge for future support and resistance which it’s kind of brilliant he’s really taking two underlying essences of price action and saying this should have a representation or some sort of ability to detect future supported resistance, but he didn’t just isolate that by itself created something that called sank expand a he created something else called to think this Bambi which is this blue line here and this blue line is based purely upon price section it takes the highest high plus the lowest low over the last fifty two time periods now we’re on a daily chart, so that would be the equivalent of fifty two candles aka two months of price action should be ie now take a, but I use a K a lot, so ie two months of price section, and then what it does is it divides that in half, and then shoots at twenty six nine percent and that becomes known as senko spend beat the shading in between is really just the shading between the two values now this como is kind of dynamic and unique it changes over time it has trajectory it has a sickness or thinness to it it can have it to where its belly side up or belly side down what that means is the sanku spanning is up for the sink you spend a is down that can all have a gauge and a bearing on the kuhmo and the kumo main job is to identify or give you a gauge for support and resistance now that may be different from what you’ve been looking at supporting resistance before, because, maybe you’ve been playing with safe Fibonacci’s and you pull up a Fibonacci from this last move and you have three lines in the sand and, so there’s something that says well support and resistance is just lines in the sand or you may have used something called pivot points and you see these pivot points are horizontal lines and they have the same approach to support resistance support resistance is based on lines in the sand that is a Western concept and, so that is a Western view and I when I say Western I mean pretty much European all of Europe and the Americas that’s the general view of supporting resistance well Sado looks at a little bit differently he kind of deconstructed approaches it from a different perspective he feels that support resistance is based upon a previous price action and B is not a line in the sand to him support a resistance, if it’s based upon previous price action has to be evolving has to change over time and probably is several layers deep it’s probably not just 135 140 145 you know 130 330 er it’s generally not like that it generally looks at support and resistance as several layers thick.

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