Understanding Trading Crypto With Ichimoku-kinko-hyo Indicator - Part 2

in Project HOPE4 months ago

Hello everyone, hope you all are doing good? I'm back with the Part 2 of this amazing series, Understanding Trading Crypto With Ichimoku-kinko-hyo Indicator. If you haven't read the Part 1, I strongly suggest you that by clicking here. In today's article we would be looking at the relationship between this cloud and the price movement? And how we can be able to determine resistance and support levels using Kumo?


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Source


There is some good vivid relationship between Kumo and price movement, as the position of Kumo/Cloud on the chart, do affect the price movement.

Whenever the cloud is below the price movement, we do experience an upward movement in price, as traders see it as an opportunity to buy, hence, pumping the price, thus, a bullish market. Look at the chart below for more clarity.


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Whenever the cloud is above the price movement, we do experience a downward movement in price, as traders tend to sell, hence, dump in price, thus, a bearish market. Look at the chart below for more clarity.


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How do you determine resistance and support levels using Kumo?

Kumo resistance and supports are quite different from our traditional resistance and support, as they are dynamic in nature, hence, they are Dynamic Resistance and Support.

As I said earlier, when Span A is above B, it signifies a upward movement of the price and when Span A is below B, it signifies a downward movement of price. So, Span A and B, do affect the movement of price and I have clearly showed it on the charts above.

Since the space between Span A and B makes the Kumo/Cloud, and we already know how Span A and B affects price movement and act as dynamic resistance and support, then how does cloud i.e the space between Span A and B affects price movement and determine resistance and support levels? It is quite simple, the clouds could be either thick or thin at different times on the chart, which always have an effect of the price movement and act as dynamic resistance and support.

Whenever the cloud is thick, i.e large, it means, there's strong resistance or support levels. Which means, the price will continue to flow in the direction it was flowing, either downward or upward. You can clearly see that from the chart below.


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Whenever the cloud is thin, i.e slim, it means, there's not strong enough resistance or support levels. Which means, the price can either reverse i.e a change in price movement or go neutral, that's no clear direction of the price movement, as it is not going up nor going down. You can clearly see that from the chart below.


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I hope you all found the article interesting and exciting. Do well to share your thoughts about the article in the comment section below. Thanks.

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Thanks For Reading

Till Next Time, Stay Safe

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It's good of course to know such information about trading, but it make it like a science, hard to learn and fewer people trading because they will think it's something complicated.

I'm thinking otherwise now. Because all those theories could be mistaken. I just buy with the lowest price I can, and sell with the higher one. The most important is to learn to wait. Patience is the key here. We don't have to worry waiting a month or a few after placing an order. Just wait for the profit, and you will be ok. Another important thing is to trade a valuable crypto, a solid one I would say. It's good as well if the coin is a bit cheap, because the cheapest ones bring much more benefits. And they can go multiple x !

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