What is ichimoku ?
Ichimoku for beginners is an important indicator mainly because of its accessibility. That’s why it is so popular among beginners. Moreover, just like candlesticks, it is also used to define the direction of a trend. These two indicators were discovered in Japan.
Ishimoku offers a number of useful interpretations. In fact, it allows you to define different levels of resistance and support. These are useful if we want to define trends in price movements. We will look at different methods of using this indicator to identify the best time to buy or sell.
Recognize signals to buy or sell
First of all, it should be noted that the main objective of this indicator is to know when to buy and sell. Since then, traders have discovered countless other virtues. In fact, Ishimoku is ideal for speeding up trading, as it enables traders to identify the best opportunities at a glance. In this way, traders don’t waste valuable time making investments that won’t be attractive.
We can detect buying signals in three specific ways:
- The price reaches the Kijun curve, which is growing.
- The Tenkan curve touches the Kujin curve.
- The trend curve does not exceed the signal curve.
In all three cases, traders will have a good opportunity to make positive trades.
As for sales instructions, they can be identified in the following situations:
- The price curve hits the Kikun curve, which is falling.
- The Tenkan curve hits the Kujin curve which is falling.
- The Trend curve hits the signal line.
In all three cases, traders may be at a loss, so it is recommended to resell. That said, keep in mind that everything will change depending on general market conditions and exceptions will always occur. In other words, regardless of the signal, the price can always move in the opposite direction. Therefore, since people can never predict a 100% price change, traders should never exceed a certain upper limit, which is usually no more than 1% of their total capital.
Manage trends well
The characteristic of the Ichimoku for beginners indicator is that it allows traders to spot different price trends. In addition, investors will have the opportunity to understand the intensity of these investments in just a few seconds. This is a valuable asset because the indicator can be used to avoid the riskiest investments and switch to investments with higher security. On a graph, we can rely on this indicator to detect price movements, as shown below:
- We speak of bullish signals when the Chikou curve exceeds the price curve and is lower than the Kumo curve. If Kijun and Tenkan are at the base of Kumo, it means that the trend has no strength. Therefore, even if profits can be generated, it still presents risks.
- When the Chikou curve exceeds the price curve, and the latter exceeds Kumo, this is also called a bullish signal. However, when the Kijun and Tenkan lines reach the Kumo level, this indicates that the price is average.
- Finally, when the Chikou curve exceeds the price curve and crosses Kumo, but the intersection of Kujin and Tenkan crosses Kumo, we speak of a high-intensity process. Most traders look for this situation because it offers the best chances of successful transactions.
- Conversely, when the Chikou curve passes below the price line, while the Chikou line crosses the Kumo line, with the Kijun and Tenkan lines passing above Kumo, we speak of a lower, lower trend.
- When the Chikou line falls below the price and the price falls below the Kumo line, but more importantly, when the Kijun and Tenkan lines converge on Kumo, we are talking about an unstable downward trend and unpredictability. In fact, it is never recommended to negotiate in this situation.
- Similarly, when Chikou’s curve falls below the price curve, and the price curve falls below Kumo, while Kijun and Tenkan drop down, we are talking about a fairly strong downtrend.
As we have seen, these different situations correspond to all the situations that can occur on the market. Therefore, it is more interesting for most traders to follow a strong uptrend. The latter offers maximum security for the investment, which can lead to more gains. Obviously the Ichimoku for beginners indicator is not enough, it must be combined with other indicators (such as Rainbow) to obtain more optimized results.