Ichimoku trading strategy when Tenkan Sen and Kijun Sen cut each other (Part 4)

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Ichimoku trading strategy when Tenkan Sen and Kijun Sen cut each other (Part 4)

Ichimoku is an extremely large and closely linked trading system. So each component can be combined to create a unique way of trading. In this article, we will learn an effective trading strategy based on the crossing signal of Tenkan Sen and Kijun Sen in the Ichimoku indicator to enter a trade.

Before going into the detailed strategy, I would like to remind you that Ichimoku is a large system made up of 5 components. In which, each component acts as a “sub-system” in a large one, closely related and inseparable. Therefore, before offering a specific trading strategy, it is necessary to have the unification of all the components of the Ichimoku system.

Ichimoku trading strategy when Tenkan Sen and Kijun Sen cut each other

This is a very simple trading strategy for traders new to Ichimoku. The entry signal of this strategy is when Tenkan Sen (brown) cut Kijun Sen (red).

If the price cuts upward, it is an increase in price. if it cuts downward, it is a bearish sign. Like other strategies when using the Ichimoku system, the Tenkan Sen and Kijun Sen crossovers must be considered in the overall market picture before making a final decision.

Note: Ichimoku indicator works best in trending markets. So make sure to use this indicator only in trending markets.

The crossover strategy between Tenkan Sen and Kijun Sen can be divided into 3 main signalss: strong, medium, and weak.

Strong Tenkan Sen/Kijun Sen signals

– Open a BUY order when the Tenkan Sen cuts upward the Kijun Sen above the Kumo cloud.

BUY when Tenkan Sen cuts Kijun Sen from below
BUY when Tenkan Sen cuts Kijun Sen from below

– Open a SELL order when Tenkan Sen cuts down to Kijun Sen below the Kumo cloud.

SELL when Tenkan Sen cuts Kijun Sen from above
SELL when Tenkan Sen cuts Kijun Sen from above

Average Tenken Sen/Kijun Sen signals

– Place a BUY order when Tenkan Sen cuts Kijun Sen upward inside the Kumo cloud.

– Place a SELL order when the Tenkan Sen cuts the Kijun Sen downward inside the Kumo cloud.

Place an order when Tenkan Sen cuts Kijun Sen inside Kumo cloud
Place an order when Tenkan Sen cuts Kijun Sen inside Kumo cloud

Weak Tenkan Sen/Kijun Sen signals

– Consider entering a BUY order when the Tenkan Sen cuts the Kijun Sen upward below the Kumo cloud.

– Consider entering a Sell order when the Tenkan Sen cuts the Kijun Sen downward above the Kumo cloud.

Open an order when Tenkan Sen cuts Kijun Sen
Open an order when Tenkan Sen cuts Kijun Sen

Specific examples

Before going into the example of this strategy, we can add one more condition. The Chikou Span (blue line) will be in the Ichimoku system to improve the accuracy of the order. The crossovers of the Tenken Sen and the Kijun Sen can be further classified based on the relationship between the Chikou Span and the price at the time of the crossover.

If the crossing signal is from above and Chikou Span is below the price, the Sell order is very safe.

If the crossing signal is from below and Chikou Span is above the price, we can enter a BUY order.

As for the position of Chikou Span that is not favorable to the cut signal of Tenkan Sen and Kijun Sen, we should observe more.

Open an order with the Tenken Sen and Kijun Sen strategy
Open an order with the Tenken Sen and Kijun Sen strategy

Tenkan Sen crosses Kijun Sen above the clouds, so the signal is weak and unclear. We wait for the price to penetrate and the candle closes below the Kumo cloud for confirmation before placing a Sell order. At point A, we open a Sell order with the stop loss placed at the top border of the Kumo cloud. When the price runs to B, the Tenkan Sen cuts Kijun Sen from below, we exit the order.

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Ichimoku trading strategy when Tenkan Sen and Kijun Sen cut each other (Part 4)
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