Ichimoku Cloud

Royal Algo Ichimoku Cloud Strategy

ⓘ Note

Since you have an insight on how to use the Ichimoku Cloud Moving Average along with Royal Algo. We will keep this section short and precise. This is mainly an explanation of what the cloud is for.

Setting up your chart with Ichimoku Cloud

Now that you already have the Moving Average on your screen. You only need to enable the Kumo Cloud. 

  • Simply go to Ichimoku Cloud settings and then enable the cloud. For the Inputs, leave it as default. This works for both desktop and mobile view.

💡 TIP

You can change the opacity percentage to make the cloud more visible.

⚠️ Recommendation - Do this!

We recommend that you go through this strategy section with the Royal Algo and Ichimoku Cloud chart in front of you. So you can follow along and get familiarized with this strategy on your chart.

 

Chikou Span - Optional

ⓘ Note

For this strategy, Chikou Span will be optional.

 

Chikou Span - This line is also known as the Lagging Line. Mainly used for confirmation signals. Chikou Span is basically the current price that has been moved 26 periods back in time. 

IMPORTANT 

If you wish to add the Chikou Span, consider these terms:

Chikou Span indicates the evolution of the current price in relation to previous price action.

  • When Chikou Span is above the current market price, this indicates that the current prices are higher than the previous prices. This suggests a bullish trend
  • When Chikou Span is below the current market price, this indicates that the current prices are lower than the previous prices, which suggests a bearish trend
  • When the Chikou Span is near or inside the current price, this indicates a ranging market

 

💡TIP

Many traders watch for the Chikou span to cross above or below previous prices to signal a potential trend change.

Reading the Cloud

How to Read Kumo Cloud

Kumo, or the cloud, represents dynamic support and resistance level. The longer the price stays below/above the cloud, the stronger the trend is

  • When the cloud is wide, the support or resistance level is strong. Meaning that the price breakout massively.
  • When the cloud is thin, the support or resistance level is considered weak.

 

⚠️ CAUTION

YOU SHOULD NEVER TRADE INSIDE THE CLOUD. THIS IS WHERE SUPPORT AND RESISTANCE MEET OR SIMPLY WHAT WE CALL THE RANGING MARKET.

 

How to Read Ichimoku Cloud Trading Signals

Since we are already implementing the previous strategy. We will only use the cloud as another form of confirmation of whether it is a strong signal or a weak signal.

  • When the fast-moving Conversion Line crosses above the Slow-moving Baseline, below the Cloud, it is considered a weak buy signal.
  • When the fast-moving Conversion Line crosses above the Slow-moving Baseline, above the Cloud, it is considered a strong buy signal.
  • When the fast-moving Conversion Line crosses below the Slow-moving Baseline, above the Cloud, it is considered a weak sell signal.
  • When the fast-moving Conversion Line crosses below the Slow-moving Baseline, below the Cloud, it is considered a strong sell signal.

 

Chart Examples

Strong Bullish Signal - When the fast-moving Conversion line crosses above the slower moving Baseline, above the cloud, we have a strong buy signal. (When the Blue line crosses above the Red line, above the cloud, we have a strong buy signal).

 

Weak Bullish Signal - When the fast-moving Conversion line crosses above the slower moving Baseline, below the cloud we have a weak buy signal. (When the Blue line crosses above the Red line, below the cloud we have a weak buy signal).

Strong Bearish Signal - When the fast-moving Conversion line crosses below the slower moving Baseline, below the cloud we have a strong sell signal. (When the Blue line crosses below the Red line, below the cloud we have a strong sell signal). There are two crossovers in this example.

 

Weak Bearish Signal - When the fast-moving Conversion line crosses below the slower moving Baseline, above the cloud we have a weak sell signal. (When the Blue line crosses below the Red line, above the cloud we have a weak sell signal).