TRADING WITH ICHIMOKU
The concept of the trading method and Queuing Theory can also be applied to Ichimoku charting technique. The complete Ichimoku indicator comprises five lines, Tenkan-sen, Kijun-sen, Senkou span A, Senkou span B, and Chikou span. In Figure 7.7, Chikou span is not plotted. Chikou span is the closing price of the current candlestick, plotted backward by the period of the Kijun-sen.
FIGURE 7.7 Using Ichimoku lines to track trade opportunities. Support of RSI and volume indicators appears in the bottom panel.
Figure 7.7 is an illustration of how the principles of the trading method described in this book can also be applied to various indicators. As an example, the chart uses the popular indicators such as Ichimoku indicator, volume, and RSI (relative strength index).
The popular Ichimoku Cloud, shown in Figure 7.7, is the filled space between the faster line, Senkou span A, and the slower line, Senkou span B. The Ichimoku Cloud often acts as the equilibrium zone of price movements, and it marks an area of support and resistance. When price moves above the cloud, it is said it has broken out of the resistance area, and when price moves below the cloud, it has fallen from the supporting area. When prices are trading or fluctuating in the area of the cloud, it normally indicates a tug-of-war between sellers and buyers in a trading range, where price movements can ...
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