Ichimoku Kinko Hyo: one indicator, stable profit

• VFX Blog
• Strategies

One tool cannot be a decisive factor in decision making. This is the main principle of technical analysis that all traders who think how to make money on binary option should observe. But, there are exceptions, such as Ichimoku Kinko Hyo, which alone can find a deal that best matches the Dow Theory rule “price takes everything into account.”

Strategy characteristics

Indicator structure

Our exact binary options strategy uses three indicator lines:

• SenkouSpan A/B or Kumo Up/Down. The lines are shifted forward and give leading signals of a trend change.

Between the SenkouSpan A – B lines are the "Ichimoku cloud (Kumo)", usually highlighted on the chart by shading. When the price chart moves in this area, it means a temporary consolidation, a breakout/rebound from the borders gives final confirmation to other signals.

• Chinkou Span. The third forward line shows the overall price dynamics and direction.

Binary options trading signals 

Options are opened on the trend (reversals and crossing lines) and in the Kumo channel (break or rebound from borders):

• Crossing "SenkouSpan A - B". Most often means the beginning of a rollback towards Span A, which may well lead to a final reversal. The signal may be ahead of the curve, as both lines are ahead of the price, but in this case, we are always waiting for confirmation from the indicators, such as CCI or Momentum.

How else to use binary signals: we will consider the intersection level to be zero as in MACD or Awesome Oscillator - the cloud above it gives CALL inputs and PUT if it is below the level. At the end of the call, you can open additional transactions on the main movement. We are also looking for divergences of the cloud and oscillators, especially on the M30 timeframe and above.

Important for binary options: the breakdown of the Span b line is only the first sign of a change in the bulls/bears forces and a possible reversal. Further, there may be unsuccessful retests of the level, rapid increase/decrease in volumes, and other events that do not correspond to the trading strategy. If you are a beginner do not open an option until the situation is fully determined!

• Trend by Chinkou Span. Like the two previous lines, there is a forward shift in fact; we have a “slow” Moving Average confirming the general direction of the price movement.

• Breakdown of the Kumo zone. We trade similarly to line breakouts. With a wide range, we open trades as on conventional channel indicators (Bollinger bands, Envelopes, and others): an option on the next candle after the rebound, the expiration of at least 3-4 candles of the timeframe.

Open a deal on the next candle after binary signals. The expiration time of the options should be at least 5-7 minutes, even if a minute is selected as the working timeframe, as in our video.

Recommendations for use:

• There are traders who open the option as soon as the breakout candle near the Kumo border closes. When volatility is high, perhaps this approach works, but usually the price near the cloud line “slows down” a few candles and you can’t say for sure there will be a continuation of a reversal. Be patient and do not enter ahead of time!

• Typical situation: Kumo with the intersection "Kijun-Tenkan". At first glance, a reliable signal appeared, at the same time, the market is in a state of uncertainty. So open an option or not? Professional binary options traders are advised to enter expiration on the opposite Kumo border.

• Even though you can trade throughout the day, the most profitable results were obtained in the second half of the US session (from 16:00 UTC) and the end of the Asian session (until 06:00 UTC);

• When the price when leaving the cloud is accompanied by sharp and short-term impulses, this is one of the strongest signals. Here you can open in the calculation of both a reversal and a continuation. The main thing is to make sure that the breakdown is true and always remember about money management.

• The main purpose of the indicator is to confirm graphical and candlestick patterns. But you can act differently: Ichimoku gives the first signal, which is then confirmed by patterns.

In conclusion, we remind you once again that with the basic parameters of Ichimoku Kinko Hyo, depending on the characteristics of the asset, it can both give reliable signals and be very late even at intervals of H4-W1 (a week). On Forex, watch how binary options signals work and reduce the number of periods if necessary.