Identifying Trading Signals

How to Identify Ichimoku Moving Average Trading Signals

One of the most popular strategies among Ichimoku Cloud users is the Crossover Trading Strategy. The crossover between the Conversion line and Baseline can offer trading opportunities similar to the moving averages. 

You’re probably asking, why not use normal SMA or EMA? That is because the Ichimoku Cloud moving average offers support and resistance, as well as stop-loss levels, unlike the normal moving averages.

 

IMPORTANT 

  • When the fast-moving Conversion line crosses above the slower moving Baseline, we have a BUY signal. (When the Blue line crosses above the Red line, we have a buy signal).

 

  • When the fast-moving Conversion line crosses below the slower moving Baseline, we have a SELL signal. (When the Blue line crosses below the Red line, we have a sell signal).

 

  • When the Moving Average is relatively close and clasping each other, it is considered a RANGING market. 

 

💡TIP

Imagine there is an arrow at the end of the Conversion line/Blue line. It will help you find better entry and exit targets. If it’s pointing up, it indicates a bullish trend. If it’s pointing down, it indicates a bearish trend. If it’s pointing sideways, it indicates a ranging market.

 

Check the examples below to give you a better understanding.

Ranging Market

Upward/Bullish Momentum

Downward/Bearish Momentum

Strong and Weak Upward/Downward Price Movement

Strong Bullish Momentum - When the price is trending above the Conversion Line and above the Baseline, meaning that the moving average crossover has already happened. It is considered a strong bullish momentum.

Valid Trades

Weak Bullish Momentum - When the price is trending above the Conversion Line but still below the Baseline. It is considered a weak bullish momentum.

Invalid Trades

Strong Bearish Momentum - When the price is trending below the Conversion Line and below the Baseline, meaning that the moving average crossover already occurs. It is considered a strong bearish momentum.

Valid Trades

Weak Bearish Momentum - When the price is trending below the Conversion Line but still above the Baseline. It is considered a weak bearish momentum.

Invalid Trades