Hi @estate09 There are five calculations used to generate the...

Hi @estate09

There are five calculations used to generate the Ichimoku Cloud:

1. Tenkan-sen = (9-day high + 9-day low) / 2
2. Kijun-sen = (26-day high + 26-day low) / 2
3. Senkou Span A = (Tenkan-sen + Kijun-sen) / 2
4. Senkou Span B = (52-day high + 52-day low) / 2
5. Chikou Span = Close plotted 26-days in the past.

The main feature is the Kumo cloud which is formed between spans of the average of the tenkan-sen and kijun-sen plotted six months ahead (senkou span A), and of the midpoint of the 52-period high and low (senkou span B) plotted six months ahead.

A long entry is signalled when the price action is above the Kumo cloud and when the Tenkan-sen line crosses upwards through the Kijun-sen line with the condition that the Chikou Span is also above the Kumo Cloud. The long position is exited when the closing price falls below the Kijun-sen line.

The two important signalling indicators are basically short and long term moving averages.

The method can be used to find both long and short entries and supposedly helps traders identify long lived trends. The daily chart will be more reliable for this purpose, I've just noted that we have a new long entry on the hourly chart. Below is the daily chart. A trader trading purely on the daily chart would be waiting for a long entry signal. The price has just closed above the cloud so the set up for an long entry based on the daily chart is improving and the chart has just become technically stronger. All sounds complicated but it is actually just an easy mechanical system that picks points of entry and exit. It doesn't provide targets, you just buy on the buy signal and sell on the sell signal. I've found it pays to not get overly pedantic with the entry signals as normally all the indicators tend to get bunched up at entry, near enough is good enough for me. Still a work in progress for me at this stage and of course FA still reigns supreme. Esh