Ichimoku cloud

Here how you read a ichimoku cloud

1) Blue Converse line: It measures short term trend. it also shows minor support or resistance. Its very good for people involved in scalping.

2) Red Line: Its the Base line or confirmation line. it measures medium term trend

3) Lagging span or lagging line. It is used for confirmation of signals.

4) Kumo Cloud: Formed from 2 lines Span A (Green) and Span B(Red)


Observation 1:

If market price is above the conversion line( blue line), then it suggests short term uptrend and vice versa

Observation 2:

If market price is above the base line( red line), then it suggests medium term uptrend and vice versa

If the lagging span or lie is above the current price, it indicates bullishness or uptrend and vice versa

The larger the price stays below/above the Kumo Cloud, the stronger the trend.

Observation 3:

When the cloud is wide, then expected support or resistance is strong. and vice versa

NEVER TRADE INSIDE THE KUMO CLOUD

Observation 4:

When fast moving Baseline cross above the slow moving conversion line, we have a buy signal

Fibonacci Projections

Projections measures the size of the previous swings (X:A) in the same direction and project those swings from the current swings beginning at (B)
The ratios used are 0.618, 1.00, 1.618



in the fig 3.1, let x=$40, A=$30, B=$35
X to A range= 40-30=$10
take ratios and subtract it from B

Ratios                           Points                           Point B                Fibonacci

0.618                            6.18                                 $35                     $28.82
1.00                             10                                     $35                     $25
1.618                            16.18                               $35                     $18.82






In the fig 3.2, we need to calculate resistance levels,
X=$30, A=$40, B =$35


Ratios                           Points                           Point B                Fibonacci

0.618                            6.18                                 $35                     $41.18
1.00                             10                                     $35                     $45
1.618                            16.18                               $35                     $51.18

Fibonacci Extensions

Extension is " recapturing"  a percentage of the previous move. The difference between retracement and extension is that the extension captures more than 100% of the previous move X:A
The specific ratios involved in the extension are 1.272 and 1.618



Let X=$20 and A=$30 in fig 2.1
Range= 30-20=$10
Lets multiply the range by Fibonacci ratios

Ratios            Point
1.272             $12.72
1.618             $16.18


Take the number points by each ratio and subtract it from A( $30)

Ratios            Point                Pt. A                           Fibonacci Retracement
1.272             $12.72                 $30                              $17.28
1.618             $16.18                 $30                              $13.82
When the stock falls, the first support is 17.28 and second support is 13.82




Let X=$30 and A=$20 in fig 2.2
Range= 30-20=$10
Lets multiply the range by Fibonacci ratios

Ratios            Point
1.272             $12.72
1.618             $16.18


Take the number points by each ratio and add it to A( $20)

Ratios            Point                Pt. A                           Fibonacci Retracement
1.272             $12.72                 $20                              $32.72
1.618             $16.18                 $20                              $36.18


First resistance level is $32.72 and and second resistance is $36.18

Fibonacci Retracements

Fibonacci Retracements

If I think that my stock is going to go down, then my Fibonacci Zero should be on the top and 100 on bottom

So my extensions, everything above 100  should be pointing downwards

If I think that my stock is going to go up, then my Fibonacci Zero should be on the bottom  and 100 on top

So my extensions, everything above 100  should be pointing upwards

90% of the failure occurs between 78.6% and 88.6%. You should buy at this point

A swing high occurs when the current high has lower high both before and after it

 Swing low occurs when the current low has a higher low both before or after it

So question arises what if there are multiple lows or highs relative close to the same price due to price consolidation range?

Answer: for swing lows, if the lows are relatively close in price, use the low furthest to the right in the consolidation area.

: for swing highs, if the highs are relatively close in price, use the high furthest to the right in the consolidation area

When we are calculating support levels, there is only one swing high and multiple swing lows

In Fig.1.1, For support levels, Lets say x=$10, A=$30.  So the range is A-X=30-10=$20.
Lets multiply the range by Fibonacci ratios

Ratios            Point
0.382             $7.64
0.5                 $10
0.618             $12.36
0.786             $15.72

Take the number points by each ratio and subtract it from A( $30)

Ratios            Point                Pt. A                           Fibonacci Retracement
0.382             $7.64                $30                              $22.36
0.5                 $10                   $30                              $20
0.618             $12.36              $30                              $17.64
0.786             $15.72              $30                              $14.28

In Fig.1.2, For Resistance levels, Lets say x=$30, A=$10.  So the range is X-A=30-10=$20.
Lets multiply the range by Fibonacci ratios

Ratios            Point
0.382             $7.64
0.5                 $10
0.618             $12.36
0.786             $15.72

Take the number points by each ratio and add it to A( $20)

Ratios            Point                Pt. A                           Fibonacci Retracement
0.382             $7.64                $10                              $17.64
0.5                 $10                   $10                              $20
0.618             $12.36              $10                              $22.36
0.786             $15.72              $10                              $25.72