Cloud Trading Ichimoku System

Ichimoku World Book Series Volume One
Ichimoku Beginner
Gabor Kovacs
2010
http://www.ichimokuworld.com
Copyright 2010 by Gabor Kovacs. All rights r s rv d. !irst publish d i" # c mb r 2010 by Gabor Kovacs. http://www.ichimokuworld.com $o part o% this book may b r produc d or tra"smitt d i" a"y %orm or by a"y m a"s& l ctro"ic or m cha"ical& i"cludi"g photocopyi"g& r cordi"g or by a"y i"%ormatio" storag a"d r tri val syst m& without prior p rmissio" i" writi"g %rom th publish r. 'ow v r you can share this book anytime with anyone for free.
(imit o% (iability/#isclaim r o% )arra"ty )hil th author has us d his b st %%orts i" pr pari"g this book& h mak s "o r pr s "tatio"s or warra"ti s with r sp ct to th accuracy or compl t " ss o% th co"t "ts o% this book a"d sp ci%ically disclaim a"y impli d warra"ti s o% m rcha"tability or %it" ss %or a particular purpos .
*his i"%ormatio" has b " pr par d to provid g " ral i"%ormatio" o"ly. +t is "ot i"t "d d to tak th plac o% pro% ssio"al advic a"d you should "ot tak actio" o" sp ci%ic issu s i" r lia"c o" this i"%ormatio". +" th i"v stm "t ob, ctiv s& %i"a"cial situatio" or particular " ds o% a"y particular p rso".
pr pari"g this i"%ormatio"& w did "ot tak i"to accou"t
- %or maki"g a" i"v stm "t d cisio"& you " d to co"sid r .with or without th assista"c o% a" advis r/ ob, ctiv s a"d circumsta"c s. wh th r this i"%ormatio" is appropriat to your " ds&
without whose assistance, advice and su this book wouldn!t be ossible.
I dedicate this book to Angelika,
ort
"O#$%#$S
I#$&O'("$IO#
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+%$$I#+ $O ,#OW $-% I"-I.O,( .%$-O'

)hat is +chimoku Ki"ko 'yo 1 tti"g up th charts
/ 0 12
*A&$ $WO
BASI" "-A&$ A#A01SIS

3si"g +chimoku as a charti"g syst m 3si"g +chimoku as a tradi"g syst m 56ampl a"alys s Cr ati"g your %irst basic +chimoku a"alysis
2) 14 20 22 27
*A&$ $-&%%
*&A"$I"%
56 rci s s A"sw r K y
3) 84 9:
4I#A0 WO&'S
)3
Introduction
*h +chimoku )orld -ook 1 ri s is a s ri s o% thr study o% th +chimoku Ki"ko 'yo syst m.
books&
ach writt " at th right l v l %or you at ach stag i" your
*h +chimoku - gi"" r was writt " sp cially %or thos & who ar compl t ly " w to th +chimoku m thod. *h book is d vid d i"to thr mai" parts& ach o% which cov rs a" importa"t topic o% basic +chimoku tradi"g. *h
i"troduc s th +chimoku Ki"ko 'yo syst m. Also it h lps to th compo" "ts o% th syst m. *h -asic Chart A"alysis chapt r t ach s how to cr at a basic chart a"alysis with +chimoku& shows how to us it as a charti"g syst m a"d 6plai"s how to %i"d 6act opportu"iti s with th h lp o% it. *h
G tti"g to K"ow th
+chimoku ; thod chapt r
s t up th charts with th +chimoku i"dicator& a"d 6plai"s
"try
opportu"ity %or practic a"d "abl you to ass ss how much you hav l ar" d. A"sw rs to th back o% th book. *o %i"d mor a"alys s& 6pla"atio"s& l ar"i"g mat rials a"d vid os i" co"" cti"g with th syst m& pl as visit th http://www.ichimokuworld.com 'av a gr at tim r adi"g this book= +abor ,ovacs
<ractic
s ctio" at th
"d o% th
book giv s th
6 rcis s ar giv " at th
way + trad
th
+chimoku at
+chimoku )orld w bsit
<art >" G tti"g to K"ow th +chimoku ; thod
What is Ichimoku ,inko -yo5 +chimoku Ki"ko 'yo is a multi%u"ctio"al visual tr "d %ollowi"g charti"g syst m. +t m "tio" d to b th ki"g o% th i"dicators a"d tradi"g or a"aly?i"g with it is a ki"d o% high@ l v l art.
What does it!s name mean5 +chimoku m a"s: o" gla"c & Ki"ko m a"s: Auilibrium .or bala"c /& a"d 'yo m a"s: chart. *h t rm +chimoku Ki"ko 'yo could b tra"slat d as: B>" gla"c or BChart bala"c at a gla"c B. Auilibrium chartB&
Who created the Ichimoku ,inko -yo system5 +t was d v lop d by a Capa" s co"omic ,our"alist& "am Goichi 'osoda& who aim d to cr at a ki"d o% Dall@i"@o" E i"dicator to a"aly? th charts mor d ply but i" l ss tim . *h d v lopm "t o% th syst m was a hug a"d compl 6 work& as th r was "o possibility %or doi"g automat d back t sts at that tim . Goichi 'osoda start d th proc ss b %or th 1 co"d )orld )ar& with a larg group o% hir d stud "ts& who had to ma"ually backt st th chis li"g& 'osoda pr s "t d th th di%% r "t calculat d %ormulas. !i"ally& a%t r mor th " tw "ty y ars o% t sti"g a"d +chimoku Ki"ko 'yo tradi"g charti"g syst m i" his book i" 1:7:& a"d it rapidly b cam most %r Au "tly us d i"dicator i" Capa" s rooms.
Why is the system so s ecial5 )ith +chimoku& it is possibl to g t th whol pictur o% th mark t& i"cludi"g tr "d dir ctio"& th mai" support/r sista"c l v ls& a"d 6act "try or 6it poi"ts. +t also h lps to d %i" th str "gth o% th sig"al. +t is also importa"t& that +chimoku ca" b us d succ ss%ully %or all mark ts a"d o" all tim %ram s& but F lik most i"dicators @ it p r%orms a bit b tt r o" th high r o" s.
Is it +oichi
ossible to read -osoda in 3"%ortu"at lly "o& as th mat rials hav origi"al +chimoku books a"d
the original book of %nglish5 " v r b " tra"slat d i"to 5"glish. ;a"y
b li v s& that th s mat rials ar curr "tly stor d i" a s cr t sa% o% th -a"k o% Capa". Also& it is a gossip& that th whol m thod d scrib d i" 'osodaBs book was " v r b " shar d %ully with th public& a"d th r might could b a s cr t bo"us compo" "t o% th syst m. 'ow v r th s gossips w r " v r co"%irm d o%%icially.
10
Is it a stand6alone system5 +chimoku Ki"ko 'yo ca" b us d i" ma"y ways. +t ca" b us d as a sta"d@alo" syst m& or it ca" b us d as a tr "d a"d pric b haviour a"alys r a"d ca" b combi" d with a"y tradi"g syst ms or strat gi s. +t also ca" b us d as a" "try sig"al g " rator& or it ca" b us d to %ilt r th sig"als o% a"oth r tradi"g syst m. !urth rmor & as tradi"g +chimoku is a ki"d o% high@l v l art& a"d art is Auit a sub, ctiv thi"g& v ry +chimoku trad r trad s th +chimoku a bit di%% r "tly.
+chimoku with a comm rcial tradi"g syst m.
+chimoku with a"oth r Capa" s syst m& th G "ko.
11
What official sources use Ichimoku regularly for chart analysis5 Cust to m "tio" a % w %rom th bigg r " ws sourc s:
12
-ow can I add the Ichimoku indicator to my .$3 charts5 1. #ow"load a"d i"stall th plat%orm. Hou ca" choos ! l %r %r ; tatrad r8 .;*8/ a"y brok r that supports
; tatrad r8 such as Alpari& +"t rba"k!I& !I##& !I<ro tc. to us your 6isti"g brok rag accou"t or choos o" by yours l%. 2. >p " your ; tatrad r8. 2. >" th $avigator pa" l o% your ; tatrad r choos
+"dicatorsJ +chimoku& a"d add it to you chart.s/.
What are the standard settings of Ichimoku and why5 *h sta"dard s tti"gs o% ar : :@27@92. *h bas "umb r o% th %ormula is 27. *h commo" vi w is that th "umb r 27 r pr s "ts a sta"dard Capa" s
busi" ss mo"th .which 13
i"clud d 1aturdays/& th "umb r : r pr s "ts a w k a"d a hal% a"d th "umb r 92 r pr s "ts two mo"ths. 1om hold di%% r "t vi ws a"d says that th calculatio" o% Goichi 'osoda bas d o" @ amo"g oth rs @ ;oo" cycl s& as th "umb r 27 is th b st appro6imat "umb r to 6pr ss a %ull ;oo" cycl & th "umb r : r pr s "ts o" a"d a hal% Auart r ;oo" cycl & a"d "umb r 92 r pr s "ts a doubl ;oo" cycl .
Is it values5
ossible to use setting H s& it is possibl . 1om trad rs us th valu s o% 2@22@88& how v r th valu s. r comm "d d s tti"gs ar still th origi"al
alternative
What
are of
the the
com onents system5
Ichimoku ,inko -yo +chimoku Ki"ko 'yo is co"stitut d by %iv li" s: @ *h $enkan6Sen .Co"v rsio" li" / is calculat d as
.'igh st 'igh K (ow st (ow//2 %or th past : p riods. @ *h ,i7un6Sen .1ta"dard li" / is calculat d as .'igh st 'igh K (ow st (ow//2 %or th past 27 p riods. @ *h "hikou S an .(aggi"g 1pa"/ is calculat d as curr "t pric tim @shi%t d backwards 27 p riods. @ *h @ *h Senkou S an A .!ast r 1pa" A/ is calculat d as Senkou S an B .!ast r 1pa" -/ is calculat d as .* "ka"@1 " K Ki,u"@1 "//2. .'igh st 'igh K (ow st (ow//2.
14
Is it necessary to learn the 8a anese name of the elements5 +t is v ry importa"t to l ar" th 6act Capa" s "am o% th +chimoku li" s& also it is a must to b abl to id "tit%y th li" s at a gal"c wh " th y ar o" a chart.
<l as r ad th %ollowi"g chapt rs o"ly& i% you hav %ully u"d rstood a"d mast r d th i"%ormatio"s o% this chapt r. +% you hav to thi"k about which li" is which& pl as co"ti"u practici"g th t rmi"ology a"d th id "ti%icatio" o% th li" s b %or co"ti"ui"g to th " 6t chapt rs.
15
<art *wo -asic Chart A"alysis
16
(sing Ichimoku as a charting system )h " w us th +chimoku Ki"ko 'yo syst m as a charti"g syst m& w do"Bt wa"t to g t "try or 6it sig"als& but w wa"t to g t importa"t i"%ormatio"s about th mark t& %or 6ampl th tr "d dir ctio"& th %utur possibiliti s a"d th mai" support a"d r sista"c l v ls.
Identifying the trend D*r "d is your %ri "dE @ this is o" o% th basic a"d wid ly k"ow" co"c pts o% th t ch"ical a"alysis. 'ow v r u"%ortu"at ly it is "ot ,ust that asy. *r "ds sp ctacularly sta"d out o" historical charts& but id "ti%yi"g a tr "d i" th b gi""i"g o% it is o" o% th hard st tasks i" chart a"alysis. *his %ollowi"g % w paragraphs will show how tr "ds ca" b spott d out with +chimoku Ki"ko 'yo.
Analy9ing the ,umo *h latt r two li" s F 1 "kou 1pa" A a"d 1 "kou 1pa" - F %orm th u"iAu Kumo % atur o% th syst m. *o i"d "ti%y th tr "d& th %irst thi"g is to obs rv this compo" "t o" itBs ow" a"d v rsus th oth r compo" "ts a"d th pric . a/ *h color o% th Kumo +% 1 "kou 1pa" A is abov 1 "kou 1pa" -& th color o% th Kumo is light a"d it i"dicat s a possibl bullish tr "d. +% th 1 "kou 1pa" A is b low 1 "kou 1pa" -& th Kumo color is dark a"d th tr "d is i"dicat d as b arish. )h " 1 "kou 1pa" A cross s 1 "kou 1pa" - th cha"g s& a"d it rais s th cha"g .
color o% th
Kumo
plausibility o% a possibl tr "d
17
b/ *h thick" ss o% th Kumo *h thick r th Kumo& th stro"g r th tr "d is. A sig"i%ica"t Kumo m a"s stro"g tr "d a"d a ti"y Kumo i"dicat s a w ak tr "d& as it is mor mi"d& that th asy %or th pric to mov through a thi" bottom o% th Kumo m a" Cloud tha" a thick o" . 'ow v r it is importa"t to k p i" top a"d th support a"d r sista"c li" s& so v " a thi" Kumo ca" tur" th pric back to itBs pr vious dir ctio"& how v r th cha"c s ar low r.
18
c/ *h Kumo v rsus pric >" o% th most basic %u"dam "tals o% +chimoku is: i% th pric is abov th Kumo& th tr "d is bullish& a"d i% th pric is b low th Kumo& th tr "d is b arish. +t is v ry visibl a"d asy to d t rmi"at i% th ov rall tr "d is bullish or b arish with this m thod. +t %ollows that v ry tr "d b gi"s with a Kumo br akout& wh " pric br aks out %rom th Kumo cloud o" th upsid or o" th dow"sid & how v r %or a p r% ctly %orm d Kumo br akout Chikou 1pa" has to br ak out %rom th Kumo too to co"%irm th dir ctio". )h " pric is movi"g i" th body o% th Cloud& it shows susp "s i" th tr "d.
d/ *h Kumo v rsus Chikou 1pa" Chikou 1pa" ca" b abov th Kumo .bullish tr "d/& b low th Kumo .b arish tr "d/ or i" th Kumo ." utral& u"d cid d tr "d/. Chikou 1pa" is a v ry importa"t tr "d
19
co"%irmatio" tool& so it is " c ssary to always r cko" with th chart a"alysis.
/ *h Kumo v rsus Ki,u"@1 " a"d * "ka"@1 " 'ow v r th positio" o% Ki,u"@1 " a"d * "ka"@1 " is usually compar d to th pric & itBs plac v rsus th Kumo ca" b th i"dicator o% th str "gth o% th tr "d too. +% th s li" s ar 6trudi"g o" th upsid o% th Kumo& it supports %urth r bullish tr "d. *h opposit o% it supports th co"ti"uatio" o% th b arish tr "d.
20
"om aring com onents rice
the
other versus ) hav alr ady compar d th Kumo v rsus pric . $ow l tBs do th sam with th oth r compo" "ts o% +chimoku. a/ Chikou 1pa" v rsus pric +% th Chikou 1pa" cross s up th pric it ca" b cou"t d as a bullish sig"& a"d vic v rsa. +% th pric is o" th upsid o% th Kumo a"d Chikou 1pa" cross s it up& it is a v ry stro"g sig" o% th possibility o% a lo"gt rm uptr "d& a"d th opposit o% it i"dicat s a stro"g dow"tr "d. +% Chikou 1pa" is i" th Kumo& th tr "d is u"d cid d& b caus th 1 "kou 1pa" A a"d 1 "kou 1pa" - support a"d r sista"c li" s ca" a%% ct to it stro"gly& a"d Chikou 1pa" ca" bou"c th pric back v " it has alr ady brok " out %rom th body o% th Cloud.
21
b/ Ki,u"@1 " v rsus pric *h Ki,u"@1 " is b havi"g as a a v ry stro"g support or r sista"c l v l so it is a v ry importa"t tool o% id "ti%yi"g tr "d cha"g s. +% pric cross s it up& this is a bullish sig"& i% pric cross s it dow"& that is a b arish sig". A bullish cross ca" happ " abov th Kumo .stro"g sig"/& i" th Kumo ." utral sig"/& or b low th Kumo .w ak sig"/& a"d vic
v rsa. *h dista"c b tw " <ric a"d Ki,u"@1 " ca" b v ry t lli"g too& as i% pric l av s b hi"d Ki,u"@1 " %ar away& it usually tur"s %lat a"d attracts back th pric to cr at Auilibrium. <l as "otic & that this is "ot a sig" o% th tr "d cha"g & but o"ly a bou"c & a"d a%t r th harmo"y o% th Ki,u"@1 " a"d pric was r stor d& th y usually mov i" th dir ctio" o% th tr "d agai".
22
c/ * "ka"@1 " v rsus pric * "ka"@1 " is mor s "sitiv to mi"or pric mov m "ts& as it r pr s "ts th mom "tum& how v r it ca" b us d as a tr "d@co"%irmatio" tool too. !or 6ampl i% pric is i" a tr "d& it usually cr at s wav s& a"d mov s back through * "ka"@1 " to Ki,u"@1 "& th " bou"c s i"to th dir ctio" o% th tr "d agai". +% pric mov s through * "ka"@1 " i" th dir ctio" o% th tr "d i" th cours o% a bou"c & it co"%irms th co"ti"uatio" o% th tr "d.
d/ Chikou 1pa" v rsus Ki,u"@1 " Chikou 1pa" ca" b abov .bullish sig"/& or b low .b arish sig"/ Ki,u"@1 ". As Ki,u"@1 " is a v ry stro"g support/r sista"c l v l& as lo"g as th Chikou 1pa" is abov it th bullish mov m "ts ar w ll support d& a"d i% Chikou 1pa" is stayi"g b low Ki,u"@1 "& th dow" mov m "ts ar support d. +t is v ry commo"& that Chikou 1pa" is bou"ci"g o" th Ki,u"@1 " b %or a hug mov happ "s.
23
/ * "ka"@1 " v rsus Ki,u"@1 " A * "ka"@1 "/ Ki,u"@1 " cross ca" also i"dicat th cha"g or th co"ti"uatio" o% th tr "d. A" up cross ca" happ " abov th Kumo .stro"g sig"al/& i" th body o% th Kumo ." utral sig"al/& or b low th Kumo .w ak sig"al/ a"d vic v rsa.
24
$he
icture
of
the 'ow v r th compo" "ts o% th +chimoku Ki"ko 'yo syst m w r d scrib d s parat ly& it is i"disp "sabl to us both compo" "ts tog th r to s pictur at a gla"c . +t %ollows that th d scriptio" o% a" id al bullish tr "d sig" or co"%irmatio" would b : 1. th pric is abov th Kumo& * "ka"@1 " a"d Ki,u"@1 " 2. th Kumo is thick a"d bullish 2. th Kumo 8. th Chikou 1pa" is abov both Kumo& * "ka"@1 "& Ki,u"@1 " a"d pric *h pictur o% a" id al b arish tr "d would b : 1. th pric is b low th Kumo& * "ka"@1 " a"d Ki,u"@1 " 2. th Kumo is thick a"d b arish 2. th * "ka"@1 " has cross d dow" Ki,u"@1 " b low th Kumo 8. th Chikou 1pa" is b low both Kumo& * "ka"@1 "& Ki,u"@1 " a"d pric * "ka"@1 " has cross d up Ki,u"@1 " abov th th ov rall tr "d a"d th whol
ideal trend
25
+d al b arish tr "d.
$he
signs
of
trend G gardi"g to th pr viously d scrib d id al bullish tr "d& th sig"s o% th tr "d w ak "i"g would b : 1. Chikou 1pa" mov s b low Ki,u"@1 " 2. <ric mov s b low * "ka"@1 "& th " Ki,u"@1 " 2. * "ka"@1 " cross s dow" Ki,u"@1 " 8. -oth Chikou 1pa"& * "ka"@1 "& Ki,u"@1 " a"d pric mov s i"to th body o% th Kumo 9. *h Kumo tur"s b arish .dark/ !i"ally& i% pric br aks out %rom th Cloud o" th dow"sid with at l ast th b diag"os d. co"%irmatio" o% th Chikou 1pa"& a compl t cha"g o% th tr "d .%rom bullish to b arish/ ca"
weakening
26
G gardi"g to th pr viously d scrib d id al b arish tr "d& th sig"s o% th tr "d w ak "i"g would b : 1. Chikou 1pa" mov s abov Ki,u"@1 " 2. <ric mov s abov * "ka"@1 "& th " Ki,u"@1 " 2. * "ka"@1 " cross s up Ki,u"@1 " 8. -oth Chikou 1pa"& * "ka"@1 "& Ki,u"@1 " a"d pric mov s i"to th body o% th Kumo 9. *h Kumo tur"s bullish .light/ !i"ally& i% pric br aks out %rom th Cloud o" th upsid with at l ast th co"%irmatio" o% th Chikou 1pa"& a compl t cha"g o% th tr "d .%rom b arish to bullish/ ca" b diag"os d.
Identifying
su
ort All +chimoku li" s ar support a"d r sista"c li" s& how v r th y do"Bt hav th sam str "ght. G gardi"g to th pr viously d scrib d id al bullish tr "d& th str "gth ord r o% th support l v ls .i" d sc "di"g ord r/ would b : 1. *h bottom o% th Kumo 2. *h top o% th Kumo 2. *h Ki,u"@1 " 8. *h * "ka"@1 "
and resistance levels
27
G gardi"g to th pr viously d scrib d id al b arish tr "d& th str "gth ord r o% th support l v ls .i" d sc "di"g ord r/ would b : 1. *h top o% th Kumo 2. *h bottom o% th Kumo 2. *h Ki,u"@1 " 8. *h * "ka"@1 "
(sing Ichimoku as a trading system )h " w us th +chimoku Ki"ko 'yo syst m as a tradi"g syst m& w do"Bt ,ust wa"t to g t importa"t i"%ormatio"s about th mark t& but w also wa"t to g t 6act "try a"d 6it sig"als %rom it. +" this book + will o"ly 6plai" th two most commo"ly us d "try t ch"iAu s what ar r comm "d d %or b gi"" rs.
28
$enkan6Sen:,i7un6Sen cross 1tro"g buy sig"al: cross happ "s abov th Kumo 1tro"g s ll sig"al: cross happ "s b low th Kumo $ utral buy/s ll sig"al: cross happ "s i" th body o% th Kumo ) ak buy sig"al: cross happ "s b low th Kumo ) ak s ll sig"al: cross happ "s abov th Kumo 5"try: @ cross happ "s .pr % r stro"g cross s/ @ th oth r +chimoku compo" "ts ar supporti"g th dir ctio" .as d scrib d i" th *r "d tradi"g chapt r/.
29
,umo breakout ) ar talki"g about a valid Kumo br akout& i% th pric br aks out %rom th body o% th Kumo .clos s outsid o% it/& A$# th Chikou 1pa" co"%irms th mov . +% th pric br aks out %rom th Kumo& but th Chikou 1pa" do s"Bt& w call it a %ak br akout or a %ak @out. +% th oth r compo" "ts ar supporti"g th mov too& it mak s th sig"al mor stro"g r.
4iltering ranging eriods Choppy mark ts ar th worst "ightmar o% most trad rs. -y th h lp o% th u"iAu Kumo % atur o% th +chimoku syst m& ra"gi"g p riods o% th mark t ca" b %ilt r d out with mor succ ss. +% pric march s i"to th body o% th Kumo& it m a"s th tr "d is u"d cid d& a"d ra"g is probabl . +t is "ot r comm "d d to "t r i"to a"y positio"& wh " pric is movi"g i" th Kumo. *h sam appli s to Chikou 1pa". +t do s"Bt matt r& i% pric
has alr ady brok " out %rom th 30
Kumo& i% th Chikou 1pa" is still th r . +t is v ry usual& that Chikou 1pa" bou"c s back %rom th bord r o% th Kumo a"d pulls th pric back to itBs pr vious dir ctio".
$he
timeframe $aturally a" id "ti%i d tr "d o" th high r tim %ram s ca" hold mor pot "cy a"d str "gth& tha" o" th short r tim %ram s. +t %ollows that also a Kumo br akout or a * "ka"@ 1 "/Ki,u"@1 " cross is mor r l va"t o" th tim %ram Bs +chimoku compo" "ts usually high r tim %% ct to th %ram s tha" o" th short r o" s. !urth rmor & th high r +chimoku li" s o" th low r tim %ram s. !or 6ampl & it is typical& that th valu o% th #aily chartBs Ki,u"@1 " is th 6act valu o% th '8 chartBs Kumo top. +" that cas i% pric clos s b low th #aily Ki,u"@1 "& it also m a"s that it "t r d i"to th Kumo o" th '8 chart.
;uestion
31
Where to 0oss5
ut the Sto Hou should always us a stop loss& "o matt r what. 5v " with +chimoku. +" th support/r sista"c li" s chapt r + d scrib d that th stro"g st support/r sista"c li" is th oth r sid o% th Kumo. +t %ollows that it is a good id a to put th sa% ty stop to that l v l K a % w pips bu%% r. +t is also a commo"ly us d t ch"iAu to put th stop loss to th last high/low K bu%% r& or th last rou"d "umb r l v l K bu%% r.
When
to
close
a A positio" is clos d by th stop loss& or ca" b ar clos d
osition5 ma"ually .usually i" pro%it/. *h r ma"y good mostly
t ch"iAu s r gardi"g to th tak pro%it targ ti"g& i" this book + will o"ly m "tio" a % w basic o" s that ar topic i" th " 6t volum o% th book s ri s. *h thr mai" basic m thods to clos positio" ar : r comm "d d %or b gi"" rs& a"d + will go d p r i" this
clos i% th pric cross s back th Ki,u"@1 " clos i% it r ach s a rou"d "umb r l v l clos a%t r 6 amou"t o% pips i" pro%it.
32
"reating basic analysis
your
first
Ichimoku *h hard st thi"g %or +chimoku b gi"" rs ar cr ati"g valid basic a"alys s. *h r aso" is that th pictur a"d tr "d is usually "ot as id alistic as w hav l ar" d i" th pr voius s ctio"s. !or 6ampl what i% th pric is u"d r th Kumo& th Chikou 1pa" is u"d r th Kumo too& put abov th pric & * "ka"@1 " is b low Ki,u"@1 "& a"d th Kumo %utur is bullish. )hich sig"als has mor r l va"c L Also& what i% th '8 charts ar compl t ly b arish& but th 9; charts ar cl arly bullishL
$he
minimum *h s ar th mi"imum r Auir m "ts that you should
re;uirements always ch ck to b abl to mak a tradi"g d cisio" with +chimoku: th pric vs Kumo
* "ka"@1 " vs Ki,u"@1 " Kumo %utur
Chikou 1pa" vs Kumo& <ric a"d Ki,u"@1 "
*h s ar th mi"imum r Auir m "ts. Always ch ck th m i" this ord r. +% th s param t rs ar showi"g th sam & you ca" "t r with a * "ka"@1 "/Ki,u"@1 " cross or with a Kumo br akout. +% you %i"d that %or 6ampl th * "ka"@1 " a"d Ki,u"@1 " ar br aki"g out %rom th Kumo too& it ca"
33
cou"t as a bo"us co"%irmatio" o% th mi"imum r Auir m "ts ar o"ly th m "tio" d o" s. +% you %i"d that thr
tr "d. -ut th %our pr viously
o% th m ar showi"g
th sam & but %or 6ampl * "ka"@1 " cross d Ki,u"@1 " i" th opposit dir ctio"& do "ot "t r till it starts to support th dir ctio" o% th oth r thr compo" "ts too.
$he higher timeframes +t is always r comm "d d to trad o"ly i" th dir ctio" o% th high r tim %ram s. + would advic to ch ck at l ast two high r tim %ram s& so i% you %or 6ampl wa"t to "t r o" th 19; tim %ram & ch ck th '1 a"d '8 charts %irst. +% you "t r o" th '1 chart& th " ch ck th '8 a"d #aily charts %irst& tc. )h " ch cki"g th high r tim %ram s& pl as ch ck at l ast th pr vious %our mi"imum r Auir m "ts.
Always start %rom th high r tim %ram s a"d proc d to low r tim %ram s th " a"d " v r "t r agai"st th high r tim %ram s. .+t is possibl to "t r agai"st th m with som sp cial +chimoku t ch"iAu s& but at this b gi"" r stag th b st thi"g is to always trad i" th dir ctio" o% th high r tr "d./ <l as % l %r to us th %ollowi"g ch at sh t with your v ry li" s r agrdi"g to that
daily tradi"g routi" . 1tart %rom th top o% it a"d put a small up or dow" arrow " 6t to tim %ram Bs +chimoku. +% you hav 8 small arrows poi"ti"g i"to th sam dir ctio"& you ca" mov to th " 6t .low r/ tim %ram . +% you hav th r 8 small arrows poi"ti"g i"to th sam dir ctio" agai"& you ca" go to your "try tim %ram . A"alys th charts with your ch at sh t a"d start to look %or * "ka"@1 "/Ki,u"@1 " cross s or Kumo br akouts th r .
34
"-%A$ S-%%$
-igher timeframe 2 <e.g. -3=

<ric vs Kumo
-igher timeframe > <e.g. -2=

<ric vs Kumo
%ntry $imeframe <e.g. .2?=

<ric vs Kumo
35
%@am le analysis 2. 'igh r tim %ram 1. .'8/
<ric vs Kumo (*
* "ka"@1 " vs Ki,u"@1 " (* Kumo %utur (* -igher <-2= timeframe >.
Chikou 1pa" vs Kumo& <ric a"d Ki,u"@1 " (*
36
<ric vs Kumo (*
* "ka"@1 " vs Ki,u"@1 " (* Kumo %utur (* %ntry timeframe <.2?=
<ric vs Kumo (*
* "ka"@1 " vs Ki,u"@1 " (* Kumo %utur (* %ntry strategyA
Kumo
br akout
a"d/or
* "ka"@
1 "/Ki,u"@1 " cross Sto 0ossA at th bottom o% th Kumo K bu%% r %@it strategyA rou"d "umb r l v l& or pric /Ki,u"@1 " cross
37
%@am le analysis >. -igher <-3= timeframe 2.
<ric vs Kumo 'OW#
* "ka"@1 " vs Ki,u"@1 " 'OW# Kumo %utur 'OW# -igher <-2= timeframe >.
Chikou 1pa" vs Kumo& <ric a"d Ki,u"@1 " 'OW#
38
<ric vs Kumo 'OW#
* "ka"@1 " vs Ki,u"@1 " 'OW# Kumo %utur 'OW# %ntry timeframe <.2?=
<ric vs Kumo 'OW#
* "ka"@1 " vs Ki,u"@1 " 'OW# Kumo %utur 'OW# %ntry strategyA
Kumo
br akout
a"d/or
* "ka"@
1 "/Ki,u"@1 " cross Sto 0ossA at th top o% th Kumo K bu%% r %@it strategyA rou"d "umb r l v l
39
%@am le analysis B. -igher <-3= timeframe 2.
<ric vs Kumo (*
* "ka"@1 " vs Ki,u"@1 " (* Kumo %utur (* -igher timeframe >. <-2=
40
<ric vs Kumo (*
* "ka"@1 " vs Ki,u"@1 " (* Kumo %utur (* %ntry timeframe <.2?=
<ric vs Kumo (*
* "ka"@1 " vs Ki,u"@1 " (* Kumo %utur (*
%ntry strategyA Kumo br akout Sto 0ossA at th bottom o% th Kumo K bu%% r %@it strategyA pric /Ki,u"@1 " cross
41
%@am le analysis 3. -igher <-3= timeframe 2.
<ric vs Kumo (*
* "ka"@1 " vs Ki,u"@1 " (* Kumo %utur (* -igher <-2= timeframe >.
42
<ric vs Kumo (*
%ntry timeframe <.2?=
<ric vs Kumo (*
%ntry strategyA Kumo br akout Sto 0ossA at th bottom o% th Kumo K bu%% r %@it strategyA rou"d "umb r l v l& or pric /Ki,u"@1 " cross
43
%@am le analysis ?. -igher <-3= timeframe 2.
<ric vs Kumo 'OW#
* "ka"@1 " vs Ki,u"@1 " 'OW# Kumo %utur 'OW# -igher <-2= timeframe >.
44
<ric vs Kumo 'OW#
* "ka"@1 " vs Ki,u"@1 " 'OW# Kumo %utur 'OW#
%ntry timeframe <.2?=
<ric vs Kumo 'OW#
* "ka"@1 " vs Ki,u"@1 " 'OW# Kumo %utur 'OW# %ntry strategyA
Kumo
br akout
a"d/or
* "ka"@
1 "/Ki,u"@1 " cross Sto 0ossA at th bottom o% th Kumo K bu%% r %@it strategyA pric /Ki,u"@1 " cross
45
<art *hr <ractic
46
%@erciese 2. What is the name of the Ichimoku com onents5 *lease write the names ne@t to the correct numbers.
2.A >.A B.A 3.A ?.A ).A
47
%@erciese >. Is the trend currently bullish or bearish5 Why5 *lease give at least 3 e@ lanations.
$he trend is C........................ becauseA 2.A >.A B.A 3.A
48
%@erciese B. What are the most im ortant resistance levels on this icture5 .ention the B most im ortant ones in descending order.
2.A >.A B.A
49
%@erciese 3. A.= Which strategy did we use when we entered at the candle marked with the arrow5
AnswerA C.............................................................................
50
B.= In the red circle you can see a $enkan6Sen:,i7un6 Sen cross. But we haven!t entered there. Why5 *lease mention the one .OS$ im ortant reason.
AnswerA C.............................................................................
51
%@erciese ?. Which strategy did we use when we entered at the candle marked with the arrow5 Was it a correct entry5 Why5
$he name of the strategyA C............................................................................. "orrect enty or notA C............................................................................. Why5 C.............................................................................
52
%@erciese ). *rice broke out from the ,umo with a s ectacular bullish candle. Is it a good idea to enter now5 Why5
AnswerA C............................................................................ Why5 C............................................................................
53
%@erciese /. Which one is the only good entry5 Why5
AnswerA C.............................................................................. WhyA C.............................................................................
54
%@erciese D. We have entered long after the close of the marked candle. Where do we have to 0oss5 ut the safety Sto
AnswerA C..............................................................................
55
%@erciese E. &egarding to the revious chart, we have entered rofit. osition if we use only with the marked candle and now we are in When should we close the Ichimoku <no round number levels, etc=5
AnswerA C..............................................................................
56
%@erciese 2F. $ow look at th %ollowi"g two charts. +t is tim to cr at your %irst ow" a"alys s. *h %irst chart shows th ." arly/ whol 2010 y ar o" th ) kly tim %ram . <l as do th %ull d tail d a"alysis o% th 2010 y ar r gardi"g to th s charts. 1tart %rom th "d o% th black li" o" th l %t .01.01.2010/& a"d a"alys +chimoku till th v ry mov m "t with th chart. <l as 6plai" what pro% ssio"al. A%t r you 53G31# #aily tim %ram . *h s co"d chart shows th ." arly/ whol 2010 y ar o" th 31#C<H
happ " d& a"d why happ " d. -
hav mad your %irst two high Auality a"alys s& you ca" start practici"g what you hav l ar" d h r o" a d mo accou"t. )h " you ar r ady with th a"alys s& you ca" compar th m with my r trosp ct a"alysis what you ca" %i"d i" th 2011 Ca"uary alt r"ativ ly ditio" o% th you ca" !I *rad r ;aga?i" & or it back to m s "d
.gabor.kovacsMichimokuworld.com/ a"d ask %or a r vi w.
57
Analysis of the %(&(S' 'aily chart N................................................................................................................................................. .................................................................................................................................................... N................................................................................................................................................. .................................................................................................................................................... N................................................................................................................................................. .................................................................................................................................................... N................................................................................................................................................. .................................................................................................................................................... N................................................................................................................................................. .................................................................................................................................................... N................................................................................................................................................. ....................................................................................................................................................
58
Analysis of the (S'8*1 Weekly chart N................................................................................................................................................. .................................................................................................................................................... N................................................................................................................................................. .................................................................................................................................................... N................................................................................................................................................. .................................................................................................................................................... N................................................................................................................................................. .................................................................................................................................................... N................................................................................................................................................. .................................................................................................................................................... N................................................................................................................................................. .................................................................................................................................................... N.................................................................................................................................................
59
A"sw r K y
60
%@erciese 2. 1.: * "ka"@1 " 2.: Ki,u"@1 " 2.: Chikou 1pa" 8.: 1 "kou 1pa" A 9.: 1 "kou 1pa" 7.: Kumo %@erciese >. *h tr "d is -5AG+1' b caus : 1. *h pric is b low th Kumo. 2. * "ka"@1 " is b low Ki,u"@1 " 2. Chikou 1pa" is b low Kumo& pric a"d Ki,u"@1 " 8. *h Kumo %utur is b arish .dark/. %@erciese B. 1. *h top o% th Kumo 2. *h bottom o% th Kumo 2. *h Ki,u"@1 " %@erciese 3. A./ ) us d th * "ka"@1 "/Ki,u"@1 " cross strat gy. -./ +% pric march s i"to th body o% th Kumo& it m a"s th tr "d is u"d cid d& a"d ra"g r comm "d d to movi"g i" th Kumo. %@erciese ?. ) us d th Kumo -r akout strat gy. +t was a corr ct "try& as Chikou 1pa" co"%irm d th mov a"d all oth r +chimoku compo" "ts w r supporti"g th mov too. is probabl . +t is "ot is "t r i"to a"y positio"& wh " pric
61
%@erciese ). $o& it is "ot a good id a to "t r "ow& as a Kumo br akout is valid o"ly i% at l ast th Chikou 1pa" co"%irm s th mov . ' r th Chikou 1pa" was still i"/u"d r th Kumo& a"d look what happ " d lat r:
Chikou 1pa" was bou"c d back by th bottom o% th Kumo .which is a stro"g r sista"c li" as you hav l ar" d pr viously/. 1o th mov was o"ly a %ak out. *hat is why you should always co"%irm a Kumo br akout with .at l ast/ th Chikou 1pa". %@erciese /. *h $o. 8. is th o"ly good "try& as Chikou 1pa" co"%irms th mov a%t r th clos o% that ca"dl .
62
%@erciese D. *o th bottom o% th Kumo K bu%% r. As i" this cas th last low is " ar& it is also a good id a to put it u"d r th last low K bu%% r.
%@erciese E. ) should clos th positio" wh " th pric cross s back th Ki,u"@1 ".
63
4inal Words *ha"k you %or r adi"g th %irst volum o% th
)orld -ook 1 ri s. + hop you %ou"d it us %ul a"d l ar" d a
+chimoku
lot. +% you hav studi d through this book& you ar "ot a" +chimoku b gi"" r a"ymor . 'ow v r + would advis you to r ad it through at l ast o" mor tim to b sur you u"d rstood v rythi"g rightly. $ow you ca" start to practic th k"owl dg you gai" d o" a d mo accou"t. <l as k p i" mi"d& that th whol +chimoku syst m is "ot %ully cov r d i" this book. *his is th basic k"owl dg you should mast r %irst to b abl to st p to th " 6t l v l. 'ow v r with this k"owl dg you alr ady ca" cr at a basic +chimoku chart a"alysis a"d you ar "ow abl to id "ti%y a % w sa% "try opportu"iti s.
*h " 6t stag will b th s co"d volum o% th + chimoku that book& pl as watch th % l %r
)orld -ook 1 ri s& th +chimoku 56p rt. *ill th r l as o%

to r ad my r gular +chimoku a"alys s o" my w bsit or o" th oth r sourch s + publish& or ducatio"al vid os + hav cr at d.
)ishi"g you ma"y succ ss i" your %irst st ps with this wo"d r%ul syst m=
Gabor Kovacs
64

Cloud Trading Ichimoku System

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Ichimoku World Book Series Volume One

pr pari"g this i"%ormatio"& w did "ot tak i"to accou"t

without whose assistance, advice and su this book wouldn!t be ossible.

I dedicate this book to Angelika,

+%$$I#+ $O ,#OW $-% I"-I.O,( .%$-O'

BASI" "-A&$ A#A01SIS

*h +chimoku )orld -ook 1 ri s is a s ri s o% thr study o% th +chimoku Ki"ko 'yo syst m.

+chimoku ; thod chapt r

s t up th charts with th +chimoku i"dicator& a"d 6plai"s

6 rcis s ar giv " at th

+chimoku )orld w bsit

<art >" G tti"g to K"ow th +chimoku ; thod

+chimoku with a comm rcial tradi"g syst m.

+chimoku with a"oth r Capa" s syst m& th G "ko.

+"dicatorsJ +chimoku& a"d add it to you chart.s/.

busi" ss mo"th .which 13

com onents system5

<art *wo -asic Chart A"alysis

plausibility o% a possibl tr "d

co"%irmatio" tool& so it is " c ssary to always r cko" with th chart a"alysis.

"om aring com onents rice

and resistance levels

has alr ady brok " out %rom th 30

a A positio" is clos d by th stop loss& or ca" b ar clos d

osition5 ma"ually .usually i" pro%it/. *h r ma"y good mostly

"reating basic analysis

minimum *h s ar th mi"imum r Auir m "ts that you should

* "ka"@1 " vs Ki,u"@1 " Kumo %utur

Chikou 1pa" vs Kumo& <ric a"d Ki,u"@1 "

tr "d. -ut th %our pr viously

-igher timeframe 2 <e.g. -3=

* "ka"@1 " vs Ki,u"@1 " Kumo %utur

Chikou 1pa" vs Kumo& <ric a"d Ki,u"@1 "

-igher timeframe > <e.g. -2=

* "ka"@1 " vs Ki,u"@1 " Kumo %utur

Chikou 1pa" vs Kumo& <ric a"d Ki,u"@1 "

%ntry $imeframe <e.g. .2?=

* "ka"@1 " vs Ki,u"@1 " Kumo %utur

Chikou 1pa" vs Kumo& <ric a"d Ki,u"@1 "

%@am le analysis 2. 'igh r tim %ram 1. .'8/

Chikou 1pa" vs Kumo& <ric a"d Ki,u"@1 " (*

* "ka"@1 " vs Ki,u"@1 " (* Kumo %utur (* %ntry timeframe <.2?=

Chikou 1pa" vs Kumo& <ric a"d Ki,u"@1 " (*

* "ka"@1 " vs Ki,u"@1 " (* Kumo %utur (* %ntry strategyA

Chikou 1pa" vs Kumo& <ric a"d Ki,u"@1 " (*

%@am le analysis >. -igher <-3= timeframe 2.

<ric vs Kumo 'OW#

Chikou 1pa" vs Kumo& <ric a"d Ki,u"@1 " 'OW#

<ric vs Kumo 'OW#

Chikou 1pa" vs Kumo& <ric a"d Ki,u"@1 " 'OW#

<ric vs Kumo 'OW#

Chikou 1pa" vs Kumo& <ric a"d Ki,u"@1 " 'OW#

%@am le analysis B. -igher <-3= timeframe 2.

Chikou 1pa" vs Kumo& <ric a"d Ki,u"@1 " (*

* "ka"@1 " vs Ki,u"@1 " (* Kumo %utur (* %ntry timeframe <.2?=

Chikou 1pa" vs Kumo& <ric a"d Ki,u"@1 " (*

* "ka"@1 " vs Ki,u"@1 " (* Kumo %utur (*

Chikou 1pa" vs Kumo& <ric a"d Ki,u"@1 " (*

%@am le analysis 3. -igher <-3= timeframe 2.

Chikou 1pa" vs Kumo& <ric a"d Ki,u"@1 " (*

* "ka"@1 " vs Ki,u"@1 " (* Kumo %utur (*

Chikou 1pa" vs Kumo& <ric a"d Ki,u"@1 " (*

%ntry timeframe <.2?=

* "ka"@1 " vs Ki,u"@1 " (* Kumo %utur (*