The cloud of the Ichimoku indicator consists of two moving average lines leading to line A and line B.
If you want to use the indicator for take profit levels or extend your take profit level, then the Ichimoku indicator will be perfect for you.
Working of Ichimoku cloud indicator
Ichimoku cloud works similarly to the moving average lines. When the price crosses the Ichimoku cloud indicator, then a trend reversal occurs.
This indicator consists of two moving average lines.
- Leading line A
- Leading line B
The distance and colour between these lines determine the trend direction and strength.
If the top line A is below the top line B and the price is above the Ichimoku cloud, then the trend is bullish.
If the leading line A is above the leading line B and the price is below the Ichimoku cloud, the trend is bearish.
If the span of leading line A and leading line B is large, the trend strength will also be high. However, if the span of leading line A and leading line B is small, the trend strength will be lower.
Buy and sell signal
The trading signals generate after the crossover of price and Ichimoku cloud.
Open a sell trade
Open a sell trade if the price crosses the Ichimoku cloud from the upper side. Then keep it open until the opposite crossover occurs.
Open a buy trade
If the price crosses the Ichimoku cloud from the lower side, open a buy trade. Keep the buy trade open until an opposite crossover occurs.
The bottom line
You can also use the Ichimoku cloud indicator as a confluence for taking profit levels. For example, you can identify the trend using this indicator and then trade in the direction of that trend.
Trading with the trend is easier with the Ichimoku cloud indicator.Download