Ichimoku Strategy #1 – The Ideal Ichimoku Strategy

The Ideal Ichimoku Strategy is the first strategy in my series over Ichimoku Kinko Hyo. There are two sides to a trade, and so there will be two different setups for long and short setups. This strategy comes from the phenomenal work of Manesh Patel in his book, Trading with Ichimoku Clouds: The essential guide to Ichimoku Kinko Hyo technical analysis. Buy it, don’t pirate.

Patel identified this strategy as the foundational strategy. Because it uses all of the components of the Ichimoku system, I believe that this is the strategy that people should be able to know so well, that they can glance at a chart and understand what is happening. You should see this strategy and be ready to trade it profitably before you transition into trying other Ichimoku strategy. If you don’t, you can run the risk of being disenfranchised with the system and believe that it is another trading system that doesn’t work.

Moving on to the other strategies without mastering this strategy first is very dangerous to your trading development and your understanding of the Ichimoku Kinko Hyo system.

Ideal Ichimoku Bullish Rules

1. Price above the Cloud.
2. Tenkan-Sen above Kijun-Sen.
3. Chikou Span above the candlesticks.
4. The Future Cloud is ‘green’ – Future Senkou Span A is above Future Senkou Span B.
5. Price is not far from the Tenkan-Sen or Kijun-Sen
6. Tenkan-Sen, Kijun-Sen, and Chikou Span should not be in a thick Cloud.

Ideal Ichimoku Bearish Rules

1. Price below the Cloud.
2. Tenkan-Sen below Kijun-Sen.
3. Chikou Span below the candlesticks.
4. The Future Cloud is ‘red’ – Future Senkou Span A is below Future Senkou Span B.
5. Price is not far from the Tenkan-Sen or Kijun-Sen.
6. Tenkan-Sen, Kijun-Sen, and Chikou Span should not be in a thick Cloud.

Sources: Péloille, Karen. (2017). Trading with Ichimoku: a practical guide to low-risk Ichimoku strategies. Petersfield, Hampshire: Harriman House Ltd.

Patel, M. (2010). Trading with Ichimoku clouds: the essential guide to Ichimoku Kinko Hyo technical analysis. Hoboken, NJ: John Wiley & Sons.

Linton, D. (2010). Cloud charts: trading success with the Ichimoku Technique. London: Updata.

Elliot, N. (2012). Ichimoku charts: an introduction to Ichimoku Kinko Clouds. Petersfield, Hampshire: Harriman House Ltd.

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Ichimoku Kinko Hyo Guide – A walk through a trade. Ichimoku Kinko Hyo – Introduction and History The Ichimoku Kinko Hyo System Ichimoku Strategy #2 – K-Cross, The Day Trading Strategy