Lessons from the Pros


One Look in Action

Continuing our discussion on the Ichimoku charting technique, I plan to put those charts to use in the equity markets. Remember, although the Ichimoku charts can offer signals, they are not a replacement for supply and demand. They should be used to confirm trading decisions only.

Looking at the S&P 500 Index on an Ichimoku cloud chart, you can see that the buy signals generated from the crossing of the conversion line above the base line confirmed the momentum breakouts.  This would have allowed a trader to join the bullish trend in the markets.

inx ichi

The leading index in our current rally has been the Russell 2000.  This is a more sensitive barometer of the US economy as it has smaller companies that do their business within the United States.  The Ichimoku served the trader well here too.

rut ichi

We can use the Ichimoku chart on individual stocks and all timeframes.  As you can see below, the chart of Apple gave plenty of warnings for turning points at all time highs.  Currently, Apple is moving sideways and the trend is weak.  With the cloud being so thin, it is easy for price to break in either direction.  A trader should be patient to see where the new trend takes price.

aapl ichi

The cloud charts can be an odds enhancer for your trading.  If you choose to use them, use them only to compliment your price reading.  Rely on trend, supply and demand for your trading decisions as you always have.  Until next week, trade safe and trade well!

DISCLAIMER This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.