anybody out there can recommend on how to not enter a trade on a fake break of the kumo cloud. I think this is an important issue. at the momment i am entering 2 trades one with a 20 pip profit target the other break even when first profit target is hit if the chikou line moves through price ( 26 periods behind current ) whichever happens sooner i am out of my second trade
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Some ideas:
-wait 2-3 candles after the breakout for confirmation;
-do not enter trade when the oposite sides of the cloud are flat or when the could is very thin;
-do not enter trade when the price moves sideways;
-enter only in the direction of the main trend; (avoid entering on periods of retracements or consolidation)
And of course don't trade before big news.
{quote} I see you mentioned using the fibo lines for stop loss. From your experience is it better than using the 50 pips stop loss, or the change in signals?
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Im not an expert on Ichimoku, but I trade price action in longer time frames (4hrs and daily) using Candlestick patterns, fibonacci lines, and support/resistance lines.
I dont want to change the rules of this thread... This is just my view point answering your question. Look at the chart and you have multiple options for profit taking (and so for stop lose displacements):
1) 50% fibo retracement
2) Price closing under kijoun line
3) 61.8% fibo retracement
4) Tenkan crossing down kijoun line
5) Possible candle close under senkan A line (that is at the level of 50% fibo)
6) Chikou line crossind down to candle (near point 1)
Notice also that support )a, b, c , d) and resistance (A, B, C) lines have been drawn using Chikou spikes and those lines are agree with 50 and 68.5% fibo retracement
The gold question... wich one is better? ... Personaly I value all of them and decide taking account your risk tolerance and money management.
Some traders would stay in trade waiting a rebound in Senkan A support for more advance, while others have closed their possitions hours ago and are waiting for a new buy at this leve... Trading is discretionary, there are not fixed fules
Also for avoid fake entrance, you must take in account price action, support an resistance levels and fibo, in addition to Ichimoku trades
Just my 2 cents
Attached Image (click to enlarge)
"Even A Thousand Mile Journey Begins with the First Step"
{quote} Some ideas: -wait 2-3 candles after the breakout for confirmation; -do not enter trade when the oposite sides of the cloud are flat or when the could is very thin; -do not enter trade when the price moves sideways; -enter only in the direction of the main trend; (avoid entering on periods of retracements or consolidation) And of course don't trade before big news.
Ignored
Solid advice here. Ichi is great for trading the trend. As someone mentioned it can be late getting you in a reversal (remember it was designed to be used on the Daily TF). If you want to further qualify signals, only take neutral or strong TK crosses (if going long the cross happens either in the cloud (neutral) or above the cloud (Strong).
One of the principles of ichi is that price wants to always get back to equilibrium. ie if price moves too far from the Kijun it will look to come back towards it (ie a pullback).
The cloud should be seen as dynamic S/R. it is an area of S/R. Therefore, the thicker the cloud the strong the S/R and therefore when price breaks a thicker cloud, it is a stronger break of SR (and will probably retest) - you can take the retest (a kumo bounce). EDIT. Also a flat top or bottom on the cloud is a strong S/R price point.
I would only take trades that are a clear break of the kumo (ie not the price coming out of the side of the cloud).
Read the thread with great interest and have boon doing some back testing and paper trading and system seems to hold up pretty well. However, I have a question about varying signals setting up between Daily, 4H and 1H TF. For example, AUD/USD daily is clearly in downtrend but bouncing off Kumo, 4H has Tenkan crossing Kigun from above but looks like consolidation whilst in 1H Tenkan crosses Kigun from below in cloud with PA moving higher having broken through cloud. Would you ignore 4H and 1H, waiting for them to confirm resumption of downward trend obvious in daily chart.
One useful tip on entry is make sure that the entry price is NOT too far from the kijun line otherwise the price will try to swing back closer to the kijun line. Try to be less than 300 pips apart.
i'm not sure on the use of the macd and rsi on an ichimoku chart. it also goes against the TP part of the ichimoku king system. whilst i don't think that the TP should be fixed, i've never really seen MACD, RSI etc as a consistently reliable indicator to TP. In this instance it does look overbought...
i'm not sure on the use of the macd and rsi on an ichimoku chart. it also goes against the TP part of the Ichimoku king system. whilst i don't think that the TP should be fixed, i've never really seen MACD, RSI etc as a consistently reliable indicator to TP. In this instance it does look overbought... {quote}
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I agree that macd, rsi, adx and what have you should not be added as additional indi. In fact, Ichimoku is complete in its form. When all Ichimoku indicators are in favor and close above the last support / resistance, you can enter. Since this is a trend following system, it's best to utilize it at its max and let the price action do it's job, aka no target, just a trailing stop (starting at Kijun-Sen). Alternatively, you could set the daily pivots minus 1 tick as targets.
For me, when three criteria met, wait for pullback, no pullback no trade. Trade taken on smaller TF ( TF5 suits me) with other indicator(s) for confirmation
I've been backtesting ichimoku for 6 months now with my custom EA. My testing exposed that the number of bars between the past cloud (ichimoku shadow) and the close matters.
In other words, in the original screen shot, price action is too close to the cloud in the past to be profitable historically.
