About The Indicator
The Ichimoku is a trend following indicator, used for forecasting financial markets. The indicator identifies midpoints of historical highs and lows at lengths of time, and generates trading signals based upon the data.
Using The Ichimoku
The Ichimoku sets itself apart from other indicators as it actually plots itself forward in time, creating larger trading ranges and support/resistance zones, assisting traders in avoiding false breakouts.
At first glance it can seem quite intimidating with the multitude of lines it contains, however in simple terms whilst price is below the shaded cloud it is in a downtrend and when it is above the cloud it is in an uptrend. Below is an example of a downtrend on the Ichimoku.
The Ichimoku is also a great indicator for finding support and resistance areas. When price is in a downtrend the Ichimoku cloud acts as a dynamic resistance. Typically traders use the ichimoku to place stop loss orders, as the indicator provides a large amount of “breathing room” for a trade to play out.