Easyricorich goes over another indicator, this one is one of EasyRico's favorite, the Ichimoku Cloud. The use of this seemingly complicated indicator is broken down by yours truly, take advantage of this information to enhance your trading.
This indicator is a variety of averages and statistics, together they provide a multitude of useful trading signals. It’s also known as the Ichimoku Cloud, and there are 4 lines and they all have different uses:
The Senkou Span, which is the green and red lines with the shading in the middle, act as resistance and support levels, so the price should have a tough time getting through or will bounce off the clouds. You can see in the example above, example 1. shows the price bouncing off the first resistance level and continuing in a down trend.
The Kijun Sen is the blue line and it signals where the price might be going next. If the Kijun Sen is above the price the price will usually keep moving downward and vice versa. In the chart above, the left half shows the Kijun Sen stays above the price until it reverses at example 2. then goes back an forth with the up and then down trend
The Chikou Span is the green line that signals reversals, when ever the Chickou Span crosses the price that usually means there is a trend reversal. In the chart above Example 3a. shows the Chikou Span crossing the price then the price followed a short up trend at 3b. then crosses again later for a downward trend.
Lastly is the Tenkan Sen, which is a red line and it signals trends. If the Tenkan Sen is moving downward, then there should be a down trend, and vice versa. In the example above 4a. shows the Tenkan Sen moving downward, and so is the price. At example 4b. the Tenkan Sen is flat and then starts moving up and so does the price leading into another reversal.
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