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Figure 1 shows the three components of the Ichimoku chart: a basic candlestick chart, two moving averages called
Tenkan Sen and Kinjun Sen, and two clouds called Senkou Leading Span 1 and Senkou Leading Span 2.
Source: www.sharescope.co.uk.
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TRADERSstrategies
Since the Tenkan Sen (red line) crosses the Kinjun Sen (blue line) from below, there is a buy signal (yellow circle).
Source: www.sharescope.co.uk.
T1) Formulas
Kinjun Sen =
Tenkan Sen =
Senkou Span 1 =
Senkou Span 2 =
Chikou Span =
C [-25]
The 6-month downtrend resistance line is broken at the beginning of September 2007 so we have a classical
breakout buy signal at 13.10 (red arrow).
Source: www.sharescope.co.uk.
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TRADERSSTRATEGIES
F4) Ichimoku Chart of British Land PLC
The Ichimoku chart generated a buy signal when the Tenkan Sen (red line) crossed the Kinjun Sen (blue line) at the
end of August 2007. However, there is a band of resistance just above this area in the form of a cloud.
Source: www.sharescope.co.uk.
Getting an Edge
We added Chikou Span, a lagging span indicator (dotted green line). Here you can see how the price trends above
and below the clouds.
Source: www.sharescope.co.uk.
Rakesh Shah
Rakesh Shah, a professional trader, specialises in Advanced
Trading Strategies after working as an investment banker from
1995 in London and on Wall Street.
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TRADERSSTRATEGIES
On the left side, there are several signals in the blue cloud area in May (red arrows). Further signals follow in July
and August. When the price touches the cloud with a candlestick reversal pattern, we can open a short position
and place a stop loss above the cloud.
Source: www.sharescope.co.uk.
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