The Ichimoku Cloud is known as one of the most versatile indicators in technical analysis. Learn all about it here ⤵️
that combines multiple indicators in a single chart. It is used on candlestick charts as a trading tool that provides insights into potential support and resistance price zones. It is also used as a forecasting tool, and many traders employ it when trying to determine future trends direction and market momentum.
By default, the clouds are displayed in either green or red - to make the reading easier. A green cloud is created when the Leading Span A is higher than Leading Span B . Naturally, a red cloud results from the opposite situation.used by the Ichimoku strategy are not based on the closing prices of the candles. Instead, the averages are calculated based on the high and low points recorded within a given period .
Still, there is an ongoing debate about how efficient modifying the settings may be. While some argue it makes sense to adjust them, others claim that abandoning the standard settings would disrupt the balance of the system and produce lots of invalid signals.Due to its multiple elements, the Ichimoku Cloud produces different types of signals. We may divide them into momentum and trend-following signals.
Simply put, when prices are consistently above the clouds, there is a higher probability that the asset is in an upward trend. In contrast, prices moving below the clouds may be interpreted as a bearish sign, indicating a downtrend. Save a few exceptions, the trend may be considered flat or neutral when prices are doing sideway movements inside the cloud.
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