ICHIMOKU CLOUD Trading Strategy (COMPLETE GUIDE) – Part 1 ๐Ÿ”ฅ๐Ÿ”ฅ


Welcome to the video on
Ichimoku Cloud Trading Strategy. In this series, we will be learning about
Ichimoku Kinko Hyo Indicator and application of same
across various time frames. Concepts discussed in
this series will be useful in understanding the various
Ichimoku trading strategies that we will be covering ahead. So let’s get started. Ichimoku Cloud is one of the
most underrated indicators out there in the market. Not only does this
indicator help you identify which stocks to focus upon. It also helps you
identify precise moments when you should be
participating in the stock. One of the main aspects of trading successfully
with Ichimoku Cloud is to understand all of
its components fully. Unless you do this, you
will not know when to trade and when to sit on the
sidelines waiting for a trade. In this part, we will be
learning each element in detail and will also be learning about rules with respect
to trend and momentum. By the time you
finish this video, you will be able to
tell in one snapshot whether you need to
trade a particular chart or select a different
chart to trade. Let me just show you
how to get these charts as I will be posting charts
from investing.com website. So once you go to investing.com, you should then click
this indicator tab here and then select Ichimoku Cloud. Do note here that Ichimoku
Cloud is an indicator and it can be plotted on
candlestick charts, bar charts, and line charts. You can also find this in your own technical
analysis platform and the platform
provided by your broker. In investing.com, once you
plot Ichimoku Indicator, you will then get the input and the style column
that I’ve marked here. In the Input column, you will have four
parameters 9, 26, 52 and 26. These are the default
parameters for Ichimoku Cloud and I would advise
against changing these into some other value. In my own research,
these standard parameters still work very
well in the market. Now, there are
different theories as to why these
parameters were chosen. I feel it was more
related to the fact that through Ichimoku Indicator, market structure over one
week, one month, and two month was supposed to be studied. Before experimenting
with these parameters, first learn Ichimoku Cloud
with standard parameters, as this would help
you understand this
indicator better. When you plot the
Ichimoku Cloud, you would get five key
elements on the chart. By looking at these elements, beginners often get confused. Now, in my own opinion, understanding each
element on its own is essential to profiting
from Ichimoku Clouds. I will be taking up
each element in depth in the subsequent slides. So the first key
element is Tenkan and this is also known
as Conversion Line in many softwares. The second key
element, if you see, is Kijun and this is
also known as Base Line. Now, before moving forward
with other elements, let me first explain
Tenkan and Kijun in detail. Now, once I finish
explaining these, I will then explain
the remaining elements. Tenkan or Conversion
line is calculated as the average of highest high and lowest low of
previous nine days. I have posted the formula
for this on the chart, at this section. Now, in Ichimoku Clouds, do
note that high and low price is given as much importance
as closing price. Closing price is more important in Western technical
analysis concepts, whereas in the
Japanese concepts, high and low price is
given more emphasis. Japanese feel that high is
the point where supply sets in and low is the point
where demand sets in. Hence, in order to analyze
overall price action, high and low price should
be considered as well. Now if you see, even in
standard candlestick charts, tail and shadows are
given lot of importance to analyze overall demand
and supply in the chart. In Ichimoku Clouds,
every element has a crucial role to play. And therefore, when you
start looking at charts through this indicator, get into the habit of analyzing
what each element conveys. When you are looking at
Tenkan or Conversion line, the first thing you
need to look for is whether Tenkan is trending
or whether it is flat. A trending conversion line
would indicate strong trend is in place. Whereas a flat
line would indicate Price is simply consolidating. If you look at the
chart in front of you, in all these phases where
conversion line is trending, you should think
about participating in the direction of trend. Conversion line or Tenkan
is also important as it acts as continuous support
or resistance for Price. In a trend, Price repeatedly
touches Conversion line as it progresses higher. This in turn, can act
as entry opportunity which we will discuss
in subsequent parts. Let me now show how
moving average and
Tenkan are different. In this chart, I have
marked the Conversion Line that is Tenkan in blue, whereas nine period moving
average is marked in orange. If you look at the
moving average, it is much smoother than Tenkan. Moving average, if you see, is simply the average
of previous nine days of closing prices. Tenkan, on the other hand, takes
the average of high and low and this is mainly why it
flattens out when Price stops making a new high or new low over a nine day period. Look at how many times Price moves lower
than moving average. This is certainly a disadvantage
for moving averages, when traders prefer
it for trading. Tenkan, on the other hand, acts as good support region and Price does not
pierce it that often. This makes Tenkan move
viable over short term. Now, as Tenkan flattens out, it clearly gives
indication to trader to stay away from price. This is mainly because when Tenkan flattens out it reflects that price
is consolidating. So, let us now focus on Tenkan as a trend following indicator. In the previous slide, we did see how price violates
moving averages more often. Tenkan on the other hand, is a good trend
following indicator. When it comes to Tenkan,
keep two rules in mind. Number one, rising
Tenkan reflects up trend and falling Tenkan
represents down trend. Now, a trader at all times needs to align in the
direction of trend. Number two, when
price is above Tenkan, it is considered bullish. Whereas, when Price
is below Tenkan, it is considered
bearish for price. Now these are the
two broad rules that you have to
follow at all times. Let us now discuss about Kijun, which is also
known as Base Line. Kijun or Base Line is calculated as the average of highest high and lowest low of
previous 26 days. I have marked the same
on the chart here. Base Line can be plotted
across all time frames, right from a one minute chart to a monthly time frame chart. When you plot
Kijun on the chart, more often than not it will
act as a point of balance which attracts Price towards it. When Price is above Kijun, it is considered bullish
and when it is below Kijun, Trend is considered as bearish. Do note that when
Kijun is rising, this denotes trend is up. And when Kijun is falling, this denotes trend is down. There are also periods
when Kijun is flat and that represents
consolidation in Price. Kijun also acts as support
and resistance for Price and this is evident in
the chart that I’ve posted in front of you. where Price takes
support and resistance multiple times around this. One more application of Kijun is that it acts as
stop loss level. Do note here, that price can
move below Kijun at times but it is the closing
that eventually matters. Price should decisively
breach Kijun, for it to act as
a valid stop-loss. Now, this is an
important rule here, and do keep this in mind. Let us now compare Kijun and
26 period moving average. I have marked the moving
average in orange line, whereas Kijun is
marked in brown line. Moving average
again, is very smooth and follows Price with a lag. Kijun on the other hand
follows Price more closely and hence acts as a better
support and resistance level. In all these instances, it is the Kijun where
price takes support as it decisively moves
below the moving average. Now the greater number
of charts that you study, the more clearly evident
this would become. So, now that we have understood the Base and Conversion line
that is Kijun and Tenkan, let us now understand the
remaining three components of Ichimoku Clouds, that is Senkou A,
Senkou B and Chikou. Now, do note there
that I am not familiar with the Japanese
form of pronunciation. So in case I am pronouncing
these things wrong, kindly excuse me for that. Let us now understand the
construction of Ichimoku Clouds. Not many traders take the
effort to understand this fully and hence do pay attention. Now Senkou A is also
known as Lead 1. And it is the average of Base
Line And Conversion Line, that is, average of
Tenkan and Kijun. Once Senkou A is calculated, it is then projected 26
days into the future. Now, this may seem
little confusing and therefore pay
attention on the chart. Look at today’s Lead 1
value at this region. This is the result
of averaging Tenkan and Kijun values 26 days ago. I hope this is clear. As a rule of thumb, when you spot Lead 1
value rising in future, it is considered
bullish for price. On the flip side though, when you spot Lead 1
value falling in future, it is considered to
be bearish for price. In this chart, if you see, Lead 1 value is seen
falling over short term. Therefore, trend over short
term is not that positive. Let us now move to Senkou
B or Lead 2 indicator. Senkou B which is also
known as Lead 2 indicator is calculated by
averaging highest high and lowest low of
the last 52 periods. Once this is done, Senkou B is then projected
26 days into the future. That is 26 periods in future. If you look at today’s Senkou
B value at this region, it was formed 26 periods back. I hope this is again clear. In this chart, 52-day
high is at this point and 52-day low is at this
region that I’ve marked. Senkou B therefore, is
average of both these levels. Now similar to Senkou A, if level of Senkou B
is rising in future, it is considered as bullish. On the flip side, if Senkou
B is falling in future, it is considered bearish. Let us now understand
trend implication with Senkou A and
Senkou B together. Now that we have understood
Senkou A and Senkou B, let us now understand trend
implications for the same. Since Senkou A is
faster than Senkou B, whenever Senkou A
is above Senkou B, it is considered as bullish. On the flip side, whenever
Senkou A is below Senkou B, it is considered as bearish. Do recollect that
Senkou A is the average of Tenkan and Kijun which are calculated over
maximum of 26 period interval. Whereas Senkou B, if you see, is average of last 52
period high and low. And hence it is
slower than Senkou A. When Senkou A and
Senkou B come together, you the get the Kumo cloud. This area here, between
Senkou A and B is shaded and this region acts as support
and resistance for Price. Let us now look
at the Kumo cloud based on what we discussed. So this is how the
Kumo cloud looks like. The region here marked in green is where Senkou A
is above Senkou B, and hence this is the
region of support. Region where cloud is red is where Senkou A
is below Senkou B and this region then acts as
strong resistance for Price. If you look at this region here, look at how Price
has taken resistance right at the Kumo cloud. This is again, very common and this repeats on
a consistent basis. Do note that Ichimoku Clouds
are trend following indicator and therefore, you will
see these lagging Price. But before judging the
effectiveness of this indicator, I would strongly recommend
for you to study it in detail first. You will be amazed at its
ability to help you understand the overall price
structure of market. It is also very handy
at precisely telling you when you should be
trading in the market, and when you should
be stepping aside and waiting for a
trading opportunity. In this chart, you can see
the Senkou A and Senkou B along with standard
candlestick charts. In order to identify trending
phases in the market, make sure both Senkou
A and B are trending. For example, if you
look at this chart, look at the region here where both Senkou A
and B are trending. In such phases, as a trader you should be willing to
participate in the market. This is clear indication
of momentum being present and hence these are the times when you should
initiate a trade. For long trades, always
prefer both Senkou A and Senkou B are rising. This way, you will increase
your odds of success. So as of now, we have
understood Tenkan, Kijun, Senkou A and Senkou B. Let us now move to the last
element that is Chikou. Let us now understand the Chikou
within the Ichimoku Clouds. Chikou is the current price
that is shifted back 26 periods. If you look at the
chart in front of you, this current price
action that you see here is shifted 26 periods back. Now, Chikou component
is quite often the most underutilized
element of Ichimoku Clouds, but make no mistake that
it is extremely important in overall price
structure analysis. As a rule of thumb, whenever
Chikou is above price, it is considered bullish. And whenever you
find it below price, it is considered
bearish for trend. In all these instances, here
where Chikou is above price, it is bullish and you
should be looking to trade only on the long side. Similarly, in all
these instances when Chikou is below price, prefer trading on the short side as trend is clearly bearish. I hope these two
rules are clear. Let us now look at all elements
of Ichimoku Cloud together. The first thing you can
spot is how Ichimoku Clouds help you trade only
in trending periods. If you look at this region, this is where Kijun
was completely flat. Now, do recollect that
when Kijun is flat, price consolidates
and this means you should not be trading
in the instrument. Once Kijun starts
rising at this region, Price then moves higher
in a clear trend. In this region, Price was
also within the Ichimoku Cloud and this again marks
phase of consolidation and not that of trend. At all times while
studying Ichimoku charts, there are two basic
conditions you have to check. Number one, is
the price trending and does it have element
of momentum within it? And number two, what is the
direction of price trend? If you just focus on asking
these set of questions, I can guarantee you
your results in trading would improve a lot
over a period of time. Let us now take a
few case studies and let me show you
how to read charts based on Ichimoku Cloud. If you look at this chart, let us first begin with
Senkou A and Senkou B at this region. Future projection
for both is flat. And this means, trend
is neither up nor down. But when I look at
Senkou A position, it is clearly below Senkou B. This indicates bias for
trend is not positive or short term. If you look at Tenkan and Kijun, Price is below
both at this region and hence this is
again not positive. Momentum element is also missing as Chikou Indicator
is not trending and it is certainly flat in
this area of Ichimoku Cloud. Based on this overall structure, I would avoid
looking at this chart as there is no
decisive trend visible. I hope this example is clear. The second case I will
take up is of Gold. In this chart, Price
is clearly trending above the Ichimoku Cloud. I have marked the same here. Now this clearly represents
that Price is trending upwards and bias of trend is
clearly on the upside. Senkou A, if you see, is
clearly above Senkou B and this is again
a positive sign. Look at Price with respect
to Tenkan and Kijun. With Price being above both, it is clear that path of least
resistance is on the upside. Do take a note of
Chikou as well. With it being above Price, element of momentum is
also clearly visible. If you spot such
charts in the market, always pay attention to these as trend and momentum
are both clearly visible. This is a classic
case of buying on dips as trend bias is
strongly on the upside. Now that we have
seen case of up move and case of consolidation, let us now move to
case of down trend. In this chart, Price
is clearly trending below the Ichimoku Cloud. I have marked the
same in this region. This clearly represents that
Price is trending downwards and bias of trend is down. Senkou A, if you see, is
clearly below Senkou B and based on the
rules we studied, this is a negative sign. Look at Price with respect
to Tenkan and Kijun here. With Price being below both, it is clear that path
of least resistance is on the down side. Do take a note of
Chikou as well. With it being below Price, element of momentum is
also clearly visible. This chart is a case
of strong down trend and you should not be
thinking of buying this stock till trend does
not turn positive. I hope this is clear. In these three cases, it is
important for you to note how Ichimoku Clouds
help you focus on trending periods
in the market. The main advantage of
using Ichimoku Clouds is to understand the
overall structure of market and then to decide if it is
the right time to take a trade. Trend related rules
that we discussed have to be followed
at all times. And do remember that
Price position with Cloud and with respect
to Tenkan and Kijun play an important role
in price trend analysis. Along with all this, element
of momentum should be used to analyze when to trade
and when to sit out. Now at first, various elements of Ichimoku
Clouds will confuse you. This is precisely
why I have asked you to watch this couple of times and download the PDF link that I have shared in the video. In the subsequent parts, I will
be discussing various setups and techniques across
various time frames. In the meantime, if
there is any doubt, then let me know in the
comment section below, no matter how basic
your doubt Is. So kindly consider
hitting the Like button and sharing this video
if you find it useful. Thanks a lot for
watching this video guys. Take care and be safe.

53 thoughts on “ICHIMOKU CLOUD Trading Strategy (COMPLETE GUIDE) – Part 1 ๐Ÿ”ฅ๐Ÿ”ฅ

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  2. Respect for your yet another gem.one suggestion.please do a video on understanding support and resistance on multiple time frames. Thanks as always.

  3. Very useful and informative video, thanks for sharing sir ji, wish you good health and peace of mind

  4. Thank you so much for starting ichimoku series, combine ichi with renko and show it to us once. It worked quite well for me in 1 minutes chart

  5. Sir thanks for making such a complex structure simpler …sir are you using this on regular basis ,or any indication to use …and also specify which time frame suits the best .

  6. Hello sir I am using pivot points some time it gives gud signal but some time it gives fake Breakout. How can we avoid fake Breakouts !?!

  7. Thanks bro.. eagerly waiting for remaining parts.. I heard that it works best for HIGHER TIME FRAMES like one day and above. Please do post video on using with MTF. One more doubt.. there are many concepts in TA and it gets confused with this vast TA. I want to learn one Technic and in depth. can Ichimoku be the best as it contains many factors imbibed in it. Please advise

  8. Once again an excellent video Sir, thank U, yr explanation is like Namo speech in UNGA about underlying Bhartheeya thought process on Nature

  9. Great Video Sir. You are a master in the following Strategy: 1. Heikin Ashi 2. Option Chain/Open Interest 3. Volume Profile 4. ICHIMOKU CLOUD
    Please let me know if I missed any other strategy. You are very great knowledge of Stock Market.

  10. Very good explanation sir,,, I am looking forward for how to apply ichimoku system for intraday and shorter time frames,,, overall fantastic explanation,,,, this was my favorite indicator but could not work out for shorter periods on a daily time frame this is superb

  11. Sincere thanks Sir for your efforts in educating the multi dimensional aspects of Japanese Indicator.
    As a serious learner needs to get trained from a dedicated mentor like you Sir.
    Will watch it multiple times to understand the concepts well and eagerly waiting for the next part of this Series Sir.

  12. Comlex look of Ichimoku simplified!! Thank you!!
    How effective is this for intraday?

  13. Best video on Ichimoku cloud.Keep sharing. Also there are many application of this indicator want to learn such as- C lamp.

  14. Hey ST.. You have indeed made it quite simple.. Not nitpicking but some labels in the video need correction.. Like in one place there is Tenken in place of Keijun.. Another Senkou A in place of Senkou B.. Thanks

  15. Best sir ….thanku so much …as I hve to watch this video …2 times .. to clear concept …..,,๐Ÿ˜๐Ÿ˜๐Ÿ‘๐Ÿ‘๐Ÿ‘๐Ÿ™

  16. sirji, i know something about this but some dout about it is clered today thanks now i want to know how can i use in intra day

  17. THANKS SIR.IS IT NECESSARY TO USE CANDLESTICKS OR HEIKEN ASHI CANDLES MAY BE USED INSTEAD.AND CAN WE APPLY THIS IN INTRADAY TRADES WITH 5 AND 15 AND 60 MINUTES TIME FRAME IN INDEX FUTURES.REGARDS

  18. Thanks for making educational video ichimoko will work good all liquid stock only

  19. RESPECTED BROTHER…AGAIN AN EXCELLENT VIDEO….

    THIS VIDEO WILL DEFINITELY IMPROVE AND WILL ADD EXTRA LINES TO EVERYBODY'S KNOWLEDGE…..

    THANKS… THANK YOU VERY MUCH….

    HAPPY WEEKEND….GOD BLESS YOU AND YOUR ENTIRE FAMILY WITH LOTS OF LOVE, PEACE AND HAPPINESS…..๐Ÿ™๐Ÿ™๐Ÿ™

  20. Very simple explanation. Really its a great effort from you to make it KISS – Keep It Short and Simple. Thanks a lot…

  21. Again a master one… Have seen numorous videos on ichimoku.. this is really very informative.. thanks sir . In coming parts do share use of ichimoku in intraday nd swing..

  22. Thank you bro…yet another informational gift from you…..
    One doubt , if we change the chart time frame , lead 1 and 2 will be calculated based on the time frame we set or its always calculated on daily basis.

  23. Really wonderful and you made something that looks so complex easy to understand. In case you find time, please post about weirdor options strategy (could not get anything on google!), arbitrage opportunities and how to automate trading for a retail investor.

  24. Very helpful video. waiting for the next videos on ichimokus. If you kindly use the terms given in the investing.com then I think it will become more comfortable for us to relate… thanks

  25. Gr8 sir…. Simply Excellently Explained! However, any advice on reversals, in this system? Your videos on reversal possibilities might possibly be highly desired & highly appreciated by all…. :)) Look forward to seeing videos on price reversal probability in future… Salute to you in any case…

  26. Thanks for sharing. I had difficulty in understanding Ichimoku in the past, now I think you have started making it easy ๐Ÿ‘

  27. Thanks for your time and effort. U explained this indicator in a very understandable easy way. Waiting for the future videos. Thanks a lot. Have a nice time.

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