Category Archives: Ichimoku Trading

The most prominent characteristic of Ichimoku trading is the cloud which defines support / resistance, trend direction, momentum as well as trade signals. Ichimoku trading applies five (5) timeframes to determine the current bias and momentum. The shortest timeframe is the Tenkan-sen which is calculated using a 9-period high adding a 9-period low and dividing by two (9-period high + 9-period low)/2)). Incidentally, this calculation is identical to that of the Donchian Channel Mid line, when applied to a 9 bar period. A slower short term timeframe, the Kijun-sen, applies the same formula on a 26 period (26-period high + 26-period low)/2)). Again, it’s the identical formula as for a Donchian Channel Mid line, applied to a 26 bar lookback.

The relationship between the two is similar to that of a 9 and 26 period moving average. The 9 period is faster and follows the price plot relatively closely whereas the 26-period is slower. As if to underline the momentum qualities of the indicator, the 9 and 26 periods are also the default values for calculating the MACD.

A typical Ichimoku trading scenario is therefore to wait for the Tenkan-sen to cross the Kijun-sen. However, although effective, this crossover will occur infrequently in strong trends. Therefore, additional signals may be located when price itself crosses the Kijun-sen or the Tenkan-sen lines. One may then look for thrust bars, i.e. close above/below the previous high/low in order to validate the signal.

The MAD Ichimoku Squeeze

­­In this post we’ll discuss Ichimoku trend and momentum setups may be improved by using narrow range analysis in higher timeframes. For information on how the Ichimoku trend and signals are calculated, please refer to this post. Qualifying Ichimoku signals by applying higher timeframe narrow ranges is similar to the squeeze setup. Basically, we’re looking…

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London Breakout Trade Management

In a webinar hosted by SharkIndicators we’ve discussed trade management for the London Breakout Trade. We’ve covered the setup in previous posts and now return to look at how BlackBird can adjust the stop loss and profit targets. The setup itself is easy to understand and generally, it’s a good idea to work with setups…

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