The clouds have a variety of uses and add a completely new dimension to the standard candlestick chart.
Firstly, if today’s candle is above the cloud, the trend is for higher prices. The top of the cloud is the first level of support and the bottom is the second level of support.
From experience, I have seen that these really do often work, but one has to give them a little leeway. Normally, I would also wait until the end of the day to see whether the closing price is below the cloud, before even beginning to consider whether the trend has reversed.
The opposite is the case when candles are below the cloud, with this becoming the area of resistance.
Very often the market seems ...