you guys have been requesting it like
crazy so over the past couple of weeks
i've been playing with the ichimoku
cloud indicator so many of you guys have
asked me to make a video on this and i
wanted a better understanding of it
before i presented it to you guys so
that it's easily digestible because this
thing is not really easy to look at but
once you understand what each part of it
means it can help you get better entries
and potentially hold trades for longer
so in this video i'm going to talk about
the ichimoku cloud
[Music]
welcome back to the channel everybody my
name's artie and this is the moving
average a show where we discuss
everything day trading to keep you
profitable on a consistent basis uh
let's just get right into the charts
because i can't explain this with hand
emotions so after playing with this for
quite some time this is how the ichimoku
cloud indicator looks that is how you
spell ichimoku and you're gonna go with
this first one right here under
technicals what i suggest doing just to
keep it more simplified is actually
remove the lagging span that is this
green line right here so essentially
what you're left with is the conversion
line the baseline leading span a and
leading span b
let's get into each one of those so the
ichimoku cloud indicator is comprised of
five different lines two of them make up
the cloud which is either red or green
showing bullish and bearish momentum so
this is a breakdown of what the lines
are this blue line right here is called
the conversion line it is a nine period
average think of moving averages just
more precise the red line right here is
known as the baseline and it is a 26
period average then you start getting
into the cloud so this line right here
is span b and this bottom line right
here in a downtrend is span a when the
cloud reverses and goes green span a is
on top and span b is on bottom span b is
essentially a 52 period average span a
however is the baseline plus the
conversion line divided by two if you
want the exact calculations of every
single line they are right here it's not
necessary to understand the calculation
it's just important to understand
why these work together to push and or
pull the price so what i'd like to do
right now is talk about the cloud the
cloud leads the price action by 25 bars
you can see that right here the current
price is right here and 25 bars ahead is
where this cloud ends what i want you to
do is think of this cloud as a barrier
the thicker the cloud the stronger the
barrier the thinner the cloud the easier
it is to go through so right now you can
clearly see a fat ass rejection off of
this cloud because it is so thick price
is using this as a resistance area came
up to test it pushing it back down
because this cloud is too thick you can
see right here as the cloud is thinner
price is able to notch in a little bit
more but still uses it as a downtrend
i'm gonna get into that later in this
video because i called out a signal on
my telegram group which did not play out
last night and i'm gonna explain why the
ichimoku cloud is really really good for
strong long movements if you think about
this cloud as support and resistance it
does the exact same thing so clearly
seeing a bunch of price rejection up
here and again clearly seeing a bunch of
price rejection here thin cloud means
less momentum thicker cloud means more
moment so as the conversion line and the
baseline drop below the cloud pushing
the price down you're getting that nice
bearish momentum watching that play out
you can see it's broken out of that
consolidation range that it was in with
these thin clouds and as the cloud leads
it starts to slope downwards giving you
a heavier indication that the trend will
continue down at that point you have
that separation of the baseline and the
conversion line below the ichimoku cloud
and breaking that level of support and
what you can do for your price targets
is actually just look left to see where
that ichimoku cloud had that rejection
area that is the next layer of previous
support so if you're wondering how that
looks in the opposite direction this
cloud would be green the blue line on
top and the red line underneath that
once again conversion line is blue bass
line is red and span a and b
are the cloud so what i'd like to do for
just a second is explain the gbp usd
trade that i called out last night right
here
and right here we were making lower lows
as you can see right here
and right here we were making higher
lows that right there is a divergence i
saw that divergence along with a break
in a trend line and right here on this
candle is when i got in that's what my
trade looked like take profit at 35 700
and stop loss at 35 300. and i said it's
super dangerous to counter trend trade
because it's like catching a falling
knife but i only risked one percent on
the trade so it was fine i was assuming
that since the cloud thinned out it
would be easier for price to go through
especially after seeing the divergence i
also want to touch on stop losses for
just a second stop losses are not meant
to like
be you know this is how much i'm willing
to lose
it's an indication of
my analysis was wrong at what point am i
so wrong that the price is not going to
respect that and completely invalidate
all of my analysis that point for me was
right here on the telegram group i said
if it breaks this level it's going to go
down to the next support and resistance
area at
1.35 flat the price rejected off the
ichimoku cloud the cloud turned red the
baseline and the conversion line were
both below the cloud and it continued to
cascade down
like crazy as you can see right here
invalidating my analysis and making the
trade go against me that is the risk you
take when counter trend trading so much
easier to trade with the trend i went to
sleep at about 10 o'clock so had i been
awake at 3 40 something a.m i could have
taken the reverse position but i was in
a coma so how can you use the ichimoku
cloud indicator to help you with your
entries or to help you with the
direction of the trade that you want to
take what you can do is take any asset
that you're trading like gbp usd and
draw horizontal lines across areas of
support and resistance that is strictly
just looking at where the price has
rejected the most and those are going to
be your targets now that's going to give
you your major support and resistance
levels then you can take it down to the
one hour time frame and get some minor
ones in areas where the price crossed a
lot but what you can do is change the
color to something
more neutral letting you know that
they're smaller levels one above and one
below the current price this is
multi-time frame analysis it's extremely
important especially when getting those
big moves then you can take it down to
the 15 minute or the five minute and
then toss on the ichimoku cloud seeing
the price move away from this area of
resistance should give you an indication
that it will move to the next level of
support the reason that this was my call
right here last night was because we had
a previous level right here where the
price rejected and shot up once it broke
through that level my analysis was void
and it was game over until the next zone
keeping in mind this huge bank level of
an even number
1.35 so basically what i'm saying is
don't get into a counter trend trade if
all of these things are pushing the
price down if however the trend is going
down and the price is breaking through
the cloud and dancing in it wait till
it's comfortably trading above with the
conversion line the baseline and the
cloud all below the price then you can
target the next support and resistance
zone i'm probably gonna do a follow-up
video to this because it's so
complicated but if you guys got a
general understanding of what i'm
talking about here and explaining the
ichimoku cloud let me know in the
comment section down below if you would
like to learn more about those support
and resistance areas and drawing up
trend lines please watch this video next
and as always if you guys enjoyed the
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thanks so much for watching and we'll
see you in the next video