How to Use the Ichimoku Indicator?
Ichimoku strategy is one of the trend follower strategies — with high level of probability you can say whether current moves are a trend or just a correction, setting exact moment of entering the market or leaving it. Ichimoku Kinko Hyo is commonly used by Forex market traders — however we want to show that this option is also great fro traders investing in binary options.
How to use Ichimoku Cloud -- advanced Ichimoku trading strategy - on the OTC market -100% Successful
Thanks to high effectiveness of signals, Ichimoku let us generate stable profits in longer time how to use the ishimoku indicator for binary options. Basic Ichimoku lines Before we go on, everyone interested in this strategy should download Ichimoku Comparic and BarTimer indicators. This is how standard Ichimoku offered by Meta Trader looks like: This is how it looks like after installing the indicator: As you can see, transparency of the second one is much better, we can easily identify signals.
Explanation of all Ichimoku lines with way to set it: Tenkan Sen — the red one.
Kijun Sen — the blue one. Average of highest high and lowest low from last 26 periods. Kijun Sen is a line, on which strong corrections often end, stronger than Tenkan Sen. Chikou Span — the green one.
It is line chart moved back by 26 periods and it is to confirm trend direction. If it is above price trend is bullish, if it is below trend is bearish. Senkou Span A — upper band of bullish blue cloud Kumo or lower band of bearish green one.
How to set up?
It is the average of Kijun Sen and Tenkan Sen moved 26 periods ahead. Another Ichimoku feature — average is placed 26 bars ahead and we can observe how the price will behave in comparison to Senkou Span A in the future.
Senkou Span B — lower band of bullish blue Kumo or upper band of bearish one green. You will get Senkou Span B by having the average of highest high and highest low from last 52 periods and moving it 26 periods ahead.
As all trend-following indicators, it serves the primary purpose of identifying the direction and reversal points of the prevailing market trend. Being quite versatile, Ichimoku can also work as an oscillator. That is to say, it gauges the speed of the price change for a given asset. As if it was not enough, Ichimoku is also capable of locating support and resistance levels. As you can see, there is quite a bit to this indicator.
Kumo cloud will have different colours — bullish blue or bearish green. When price is in cloud, then market is in consolidation — there is uncertainty among investors. Decisions are made in the moment when price is above or below Kumo or in the best trading platforms for trading on the exchange of breaking the cloud.
How does it work?
Kumo is additional confirmation of the trend. It can look really complicated, but it is simple to remember.
More dynamic break — stronger signal. PUT signal — price is leaving low of the cloud — when cloud is bearish green.
To be honest, it is a masterful piece of work. It makes use of four individual measures of price action that can be used as individual indicators or in combinations of 2,3 or 4 to create a powerful and complete trading system. How to Use the Ichimoku Indicator?
Crossing of Tenkan Sen and Kijun Sen More experienced or looking for better filter of signals traders should make up this strategy with crossing Tenkan Sen and Kijun Sen. In combination with breaking out of cloud and Chikou Span setting we can have really interesting effects and high level of effectiveness.
Signals generated by Kijun and Tenkan: Tenkan Sen is crossing Kijun Sen from experience binary option and it is below cloud — weak buy signal Tenkan Sen is crossing Kijun Sen from below and it is in the cloud — neutral buy signal Tenkan Sen is crossing Kijun Sen from below and it is above cloud — strong buy signal Tenkan Sen is crossing Kijun Sen from above and it is above cloud — weak sell signal Tenkan Sen is crossing Kijun Sen from above and it is in cloud — neutral sell signal Tenkan Sen is crossing Kijun Sen from above and it is below cloud — strong sell signal To increase chance of ITM close of option, we should focus only on strong CALL and PUT signals.
On the chart it looks like this: Combining Ichimoku Binary signals altogether Connecting breaking from cloud with signals generated by Tenkan and Kijun will decrease number of opportunities to open position, but it will filtrate bad ones ending with OTM.
In case of some markets number of perfect signals can be really small.