Ichimoku Cloud Trading Strategy
The Ichimoku Cloud Trading Strategy involves calculating a set of averages and comparing them with the current market price to identify the trading signals. The indicator is slightly complex since it involves multiple averages. The expert advisor makes the necessary calculation as per the Ichimoku Cloud and translates the same into a buy or sell signal.
Additional notesFor traders familiar with the strategy, here is a brief insight into the code.
Tenkan-sen (Conversion Line): (9-period high + 9-period low)/2))
On a daily chart, this line is the midpoint of the 9-day high-low range, which is almost two weeks.
SET C = (SMA(HIGH,9)+SMA(LOW,9))/2
Kijun-sen (Base Line):(26-period high + 26-period low)/2))
On a daily chart, this line is the midpoint of the 26-day high-low range, which is almost one month.
SET D = (SMA(HIGH,26)+SMA(LOW,26))/2
Senkou Span A (Leading Span A): (Conversion Line + Base Line)/2))
This is the midpoint between the Conversion Line and the Base Line. The Leading Span A forms one of the two Cloud boundaries. It is referred to as “Leading” because it is plotted 26 periods in the future and forms the faster Cloud boundary.
SET A = (C+D)/2
Senkou Span B (Leading Span B): (52-period high + 52-period low)/2))
On the daily chart, this line is the midpoint of the 52-day high-low range, which is a little less than 3 months. The default calculation setting is 52 periods, but can be adjusted. This value is plotted 26 periods in the future and forms the slower Cloud boundary.
SET B = (SMA(HIGH,52)+SMA(LOW,52))/2