It has been quite some time since the last post. This post is about trading the ichimoku system for forex. GBPUSD has been presented with the opportunity for such a trade and we shall take this opportunity to explain the process on the thought and logic for this forex trading signal.
Price action for the GBPUSD has recently crossed below the kumo cloud from the top to below some time around 20 Dec 2016. It entered into the kumo again early this year. It is not exiting the kumo towards the bottom.
The recent price action failed to penetrate above the kumo cloud. More important, there were three bearish candles following through the downward trend, and going below the kumo low.
Looking at the whole of the forex ichimoku trading strategies, tenkan sen below kijun sen, while in the kumo, and chikou span below the kumo, and price level low, with a bearish forward kumo, and a price action below both the tenkan-sen and kumo low, this provide a really good opportunity to go short.
As such, a short position was taken immediately, with another sell stop limit below the candlestick low. Stop loss levels are placed based on risk level of a dollar value x sizing of position against the portfolio.
The void ahead the kumo lo is of concern if the price action does not trend lower in the periods ahead. Price action will tend to fill up the void space created subsequently.
From a time frame perspective, we hope to see the price action trend lower from 11-Jan-2017 onward. Nevertheless, we have to await and see how the price action unveil itself.
Hope the above helps those interested to learn forex trading using forex ichimoku trading strategies. Trading Ichimoku System is not as difficult as it seems to be once you understand the concept behind.