Ichimoku Kinko Hyo trading system...!

[linkon7]

Linkon,I want to pick your brain concerning the chinkou being the most powerful and underrated indicator of ichimoku.
The first encircled portion is where the chinkou crossed on top of the candle, then quickly moved back under, which might be deemed as a head fake.
The second encircled area is is the corresponding candle with respect to the chinkou crossover. Would you say that price did not obey the chinkou crossover because of the tenken and kijun flattening? Or, maybe you are looking for an additional candle for confirmation of an entry in this case?

BTW, excellent thread! I would recommend all new traders to read this thread keeping at least an open mind.I'm learning stuff, and I've been using the ichimoku cloud for almost 4 years. Thanks!

I was just making a general statement regarding CS (Chinku Span) being over looked by many. I seen your chart where you drew a trendline joining the lows. Ideally all trendline and horizontal support / resistance lines are all drawn on CS. If CS respects a trendline or horizontal line 3 or more times...that line stays on the charts as that will act as a bouncing board in future.

If CS is interacting with historical price, then preferably avoid taking a trade as that is when market is normally in a sideways phase. Ichi is a pure trend following system when ideally we should be fading the extremes for such a phase. Confirmation of this phase is when KS stay flat. Normally TS and KS are smooching each other in this phase.

Another funny experience is that cloud is more over rated.

KS is just 50% retracement of the 26 bar's highest high and lowest low. if the range is huge, then KS is very strong. If the range is very narrow, KS will be easily violated.

TS is the 50% retracement of the last 9 bar's range and that acts as a very good substitute for noise-free valuation of the current price.

Theoretically a trade occurs when 2 people agree on the price but doesn't agree on the valuation. TS is a perfect estimation of market's current valuation. KS is assumed to be the market's true valuation. Price moves in a direction and then retraces or pauses, till true valuation catches up with price or price comes to true valuation. This cycle continues and only CS gives us price levels where a section of the market participants turn aggressive and that's where the high probability trade lies.

Ichi is after all market at a glance and a understanding on the overall market scenario helps us in picking the direction. When we should go for break out or we should fade the extremes....

 

[4xpipcounter]

Based on those facts in your previous post, I'm sure you would agree that entering a long when the kijun is still above the tenken is risky, at best, or a short when the kijun is below the tenken.

I have put a lot or credence in my trade decisions when there is a TK crossover above the cloud for a long position or vice versa for a short.

I'm also in full agreement with you inasmuch that the cloud can be overrated. To some degree, you can assume it will enter one end and the other end, but making a trade based on that fact alone can prove to be futile over the long run.

It's evident you have done your homework and doing well with your trading. The point you made concerning the chinkou I will take constructively.

 

[CamelToeJoe]

Thank you for your very detailed thoughts on ichimoku once again, Linkon. You know how to describe in ways I don't. I often find myself with some sort of revelation after reading your posts. Very motivating.

I use CS on my lower subgraph (white line) and have it ahead of price (green line). It is my preference to have it aligned with the cloud and to watch price cross CS instead of CS crossing price. No difference, just easier for me.

I'm going to be using a new term when doing my analysis, Ichimoku Average (IA).

MA is used frequently for Moving Average. I personally (obviously) prefer the ichimoku formula for support/resistance over MAs and EMAs.

So I use the term IA to keep things simple and aligned with the more popular moving average abbreviations. ie 9IA = 9 period ichi average (highest high+lowest low)/2. I was writing 9 period 50% retracement but this is easier.

On my subgraph I also have 60, 120, 240, and 480 period IAs. Very nice to use these longer time frames for support/resistance.

5min Euro Futures Chart

Kumo breakouts are no joke if you are truly skilled at them. Not every kumo break is going to breakout. Obviously the key is knowing how to identify the winners from the losers. That takes a lot of hours of screen time IMO. I don't believe there are any hard and fast rules. A lot of it is intuition that comes from experience. My favorites trades are both long and short bounces off the cloud.

 

[linkon7]

Thank you for your very detailed thoughts on ichimoku once again, Linkon. You know how to describe in ways I don't. I often find myself with some sort of revelation after reading your posts. Very motivating.

I use CS on my lower subgraph (white line) and have it ahead of price (green line). It is my preference to have it aligned with the cloud and to watch price cross CS instead of CS crossing price. No difference, just easier for me.

I'm going to be using a new term when doing my analysis, Ichimoku Average (IA).

MA is used frequently for Moving Average. I personally (obviously) prefer the ichimoku formula for support/resistance over MAs and EMAs.

So I use the term IA to keep things simple and aligned with the more popular moving average abbreviations. ie 9IA = 9 period ichi average (highest high+lowest low)/2. I was writing 9 period 50% retracement but this is easier.

On my subgraph I also have 60, 120, 240, and 480 period IAs. Very nice to use these longer time frames for support/resistance.


Kumo breakouts are no joke if you are truly skilled at them. Not every kumo break is going to breakout. Obviously the key is knowing how to identify the winners from the losers. That takes a lot of hours of screen time IMO. I don't believe there are any hard and fast rules. A lot of it is intuition that comes from experience. My favorites trades are both long and short bounces off the cloud.

Some food for thought... regarding accepting the 9,26,52 settings in ichi...

Since Saturday was a trading day when the creator made ICHI, TS (9) was one and a half week's mid point and KS (26) represented the whole month's (minus 4 Sunday) mid point. The previous month's high and low's midpoint became a reference level for kumo and the previous month's midpoint between TS and KS became the other end for kumo.

Any given point of time, you know what price is doing in relation to last one and a half week (TS), last one month (KS) and the previous month (KUMO).

If one was watching the EOD chart he would know exactly where price today stands in the weekly and monthly time frame. This makes Ichi so powerful...

If i was to put in in present context, then we have 5 trading days in a week and 20 trading days a month. Long term players look at weekly chart, so TS setting of 5 makes more sense. KS setting of 20 days a month. span A is set to 40 day's high and low and span B is mid point of KS and TS of the last 40 days pushed 20 days into the future.

This would depict a more realistic view of the market in present day scenario...

Intraday, If i would trade the 3 min chart, then movement in the 15 min chart and hourly chart would be better tracked if i used 5,20, 40 ( previous hour ) shifted one hour (20) into the future...

here KS would represent the midpoint of the hourly bar, TS would be the midpoint of 15 min bar and KUMO would the support resistance of the last 2 hours...

appreciate everyone's comments on this...

 

[CamelToeJoe]

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[CamelToeJoe]

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[linkon7]

I was just looking at the IAs mentioned by you and then the settings of 5,20,40 hit me. I was up very late at night looking at the difference the settings makes to the chart. Surprisingly, the idea of TS crossing the KS and the cloud as reference made more sense. I am trying out a few more alterations and I need a week of live testing to see how effective the new settings can be. I will post the findings by next week.

 

[CamelToeJoe]

BTW - I wrote "blah" in the above edited posts because I want anyone reading or that is interested to think. My posts were basically giving some serious thoughts on my strategy away, which is counter productive IMO.

I enjoy discussing ichimoku formulas and in depth thoughts on their use, but I'm trying to keep my strategy close to home if you know what I mean.

Linkon - Your idea on '20' to be used in the formula is in reference to 1 month, correct? This is why I picked '60' in regards to 3 months. Then I have 120 for the past 6 months (highest high + lowest low)/2, then 240 for the past year (obviously approximations), and finally 480 for 2 years.

Now when I look at a 1 minute chart, that 60 now becomes IA for the past 1 hour, 120 is 2 hours, 240 is 4, and 480 is 8. This is a very good way of price valuation and key support/resistance on a bigger time frame while looking at a shorter time framed chart.

 

[CamelToeJoe]

BTW - I wrote "blah" in the above edited posts because I want anyone reading or that is interested to think. My posts were basically giving some serious thoughts on my strategy away, which is counter productive IMO.

I enjoy discussing ichimoku formulas and in depth thoughts on their use, but I'm trying to keep my strategy close to home if you know what I mean.

Linkon - Your idea on '20' to be used in the formula is in reference to 1 month, correct? This is why I picked '60' in regards to 3 months. Then I have 120 for the past 6 months (highest high + lowest low)/2, then 240 for the past year (obviously approximations), and finally 480 for 2 years.

Now when I look at a 1 minute chart, that 60 now becomes IA for the past 1 hour, 120 is 2 hours, 240 is 4, and 480 is 8. This is a very good way of price valuation and key support/resistance on a bigger time frame while looking at a shorter time framed chart.

 

[CamelToeJoe]

Oops...double post