Up and Down arrows are showed in the candle when the trigger line crosses the ErgodicCCI.
Donwload both indicators in the same folder
See picture for details.
In an uptrend or within a bounce of a downtrend, the stock gaps up and immediately encounters sellers who push the stock back down. This simply signifies the possibility of a reversal that is more reliable if the gap up occurs at resistance and the black day is accompanied by a surge in volume.
In an uptrend or within a bounce of a downtrend, the stock exhausts itself with a gap up, but although the upward movement continues, it slows noticeably. The long black day suggests a possible reversal in the making to at least fill the gap. Declining volume on the three middle days with a pickup in volume on the black day serve as confirmation.
The Belt Hold occurs fairly often and is not very reliable. The fact that the day’s opening price holds as the high of the day and the stock trends down all day leans bearish, but one really needs to note the overall trend and receive confirmation with an additional down day.
how it works, the Trendfollower system looks for a cross of the STARC band below the Bollinger Band for short trades, and the STARC band above the Bollinger Band for long trades. STARC bands are an indicator you don’t see enough of, in my opinion, and in fact they’re not available on all charting platforms. I know GFT’s DealBook software has them, as does Oanda’s system; if they’re anywhere on MetaTrader I haven’t found ‘em yet. STARC is an acronym for Stoller Average Range Channels, and you can read more about STARC bands in this Investopedia article.
Here’s a picture of a trade specified by this system, which took place over about 2 months (!):
I won’t go into all the detail of how the system works, since Trendfollower’s explanation tells you everything you need to know. But here are some of the things I like about it:
# It uses a multi-day or even multi-week timeframe, which means you don’t have to spend hours every day staring at your charts or make trading decisions on a minute by minute basis. As Trendfollower puts it, “The nice thing about trend trading, is that you don’t need to be at the computer all day long. 3 looks a day is enough.”
# It uses a very straightforward entry signal. There’s no ambiguity as to whether it’s happened or not.
# It has very clearly defined exit strategies.
# It uses Bollinger Bands, one of my favorite indicators, and STARC bands, which are an interesting indicator in the same genre as Bollingers, since they also form a statistical envelope around the price trend.
# Trendfollower says he traded with this system successfully for 3 years, which I consider a pretty good track record.
# It gives you the option of trading several different currencies without worrying too much about spread costs, since the trades are large and fairly infrequent. To quote Trendfollower again: “Because of the long term nature of my trades pip spreads are not important to me so I look for new trend breaks amongst 17 odd currency pairs.” This means that your “inventory” of potential trades to choose from is quite substantial.
So if you’re looking for a trading system that doesn’t require constant attention, high spread costs, lots of short-term trades and all the stress that ensues, this might be the one for you. Good luck if you trade with it!
The senkou span cross is one of the lesser known trading strategies within the Ichimoku Kinko Hyo system. This is mostly due to the fact that the senkou span cross tends to be more commonly used as an additional confirmation with other trading strategies rather than being used as a standalone trading strategy in its own right. However, it is nonetheless a solid trend trading strategy and can definitely be used on its own.
Given that the senkou span cross strategy, like the kumo breakout trading strategy, utilize the kumo for signal generation, it is best employed on the longer time frames of the Daily chart and above. The senkou span cross signal is given when the senkou span A line crosses over the senkou span B line of the kumo. If the senkou span A crosses the senkou span B from the bottom up, then it is a bullish signal. If it crosses from the top down, then it is a bearish signal. Nevertheless, like all trading strategies within the Ichimoku Kinko Hyo system, the senkou span cross signal needs to be evaluated against the larger Ichimoku “picture” before committing to any trade.
In general, the senkou span cross strategy can be classified into three (3) major classifications: strong, neutral and weak.
STRONG SENKOU SPAN CROSS SIGNAL
A strong senkou span cross signal takes place when the price curve is on the side of the kumo that matches the sentiment of the
senkou span cross.
NEUTRAL SENKOU SPAN CROSS SIGNAL
A neutral senkou span cross signal takes place when the price curve is inside the kumo at the time of the senkou span cross.
WEAK SENKOU SPAN CROSS SIGNAL
A weak senkou span cross signal takes place when the price curve is on the opposite side of the kumo that matches the
sentiment of the senkou span cross.
The chart in Figure VII below shows some classifications of the senkou span cross. The dashed vertical lines represent the 26-period relationship between price and the senkou span cross. Thus, point A represents a bullish senkou span cross that can be categorized as a “strong” buy signal due to the fact that price (point B), at the point of the cross, was trading above the kumo. Likewise, point C represents a bearish senkou span cross that generated a strong sell signal due to price’s location at point D below the kumo. The senkou span cross at Point E generated a neutral buy signal since price (point F) was trading within the kumo at that point.
The entry for the senkou span cross trading strategy is relatively simple, though, as mentioned above, entries do require even more attention to the overall trend on higher time frames before executing any trades. After determining the trend on the higher time frames, the trader looks for a fresh senkou span cross in the same direction as the overall trend that has been solidified by a close on the execution time frame. Once they identify a suitable opportunity, they initiate a position in the direction of the senkou span sentiment. As in all Ichimoku trading strategies, traders will be well-advised to consider the relative strength of the cross (vis-a-vis price’s location relative to the kumo) as well as the sentiment provided by the remaining Ichimoku components at the time of the cross in order to ensure the most optimum entry.
It is worth mentioning here that the strong bull (buy) signal outlined in our first chart that took place in April of 2005, while technically strong from a 1D perspective, was not aligned with the overall downtrend in-place on the Weekly and Monthly charts. Thus, traders taking this trade signal and using a senkou span cross in the opposite direction as their exit signal would have actually lost pips. This underscores the importance of evaluating sentiment on multiple time frames and trading with the overall trend.
The exit from a senkou span cross trade is generally signalled by a senkou span cross in the opposite direction of the trade, though other exit signals may be taken depending upon the trader’s risk tolerance and profit goals.
Being a “big picture” trend trading strategy like the kumo breakout strategy, the stop-loss for the senkou span cross strategy is placed on the opposite side of the kumo that the trade is transpiring on, 10 – 20 pips away from the kumo boundary.
Take Profit Targets
While traditional take profit targets can be used with the senkou span cross trading strategy, it is more in-line with the long-term trend trading approach to wait for a senkou span cross to transpire in the opposite direction of the trade before closing out the position. This method allows the trade to take full advantage of the trend without closing the trade until price action dictates unequivocally that the trend is over.
In the Daily chart in Figure VIII below for USD/CAD we can see a bearish senkou span cross at point A. This cross corresponds to the candle at point B. Since the candle closed just below the kumo, the signal is considered a strong one given that its sentiment agrees with the sentiment of the bearish senkou span cross. In addition, we confirm that the direction of this signal is aligned with the overall downtrend in-place on the Weekly and Monthly time frames, so we know that we are trading with the trend. Nevertheless, we are wary of the flat bottom kumo just to the right of the candle, which could act as an attractor for price, so we look for a conservative entry point that will ensure we will not get caught in any false breakouts. The last chikou span support at 1.2292 looks like a good anchor point for assuring this. Price closes below this point a couple of days later at 1.2290 and we enter short at point C.
For our stop-loss, we follow the kumo breakout guideline of placing it 10 – 20 pips away from the opposite side of the kumo where our trade is taking place. In this case, we place it 20 pips away from the top of the kumo above our entry candle at point D (1.2542).
Once we place our entry and stop-loss orders, we wait for the trade to unfold while continually moving our stop-loss down with the prevailing kumo. In this case, a bit more than four months later, price ranging has created a fresh senkou span cross in the opposite direction of our trade at point E, corresponding to the candle at point F where we close out our trade at 1.1908, netting us over 380 pips in the process.
Kumo Breakout trading or “Kumo Trading” is a trading strategy that can be used on multiple time frames, though it is most widely used on the higher time frames (e.g.: Daily, Weekly, Monthly) of the position trader. Kumo breakout trading is the purest form of trend trading offered by the Ichimoku charting system, as it looks solely to the kumo and price’s relationship to it for its signals. It is “big picture” trading that focuses only on whether price is trading above or below the prevailing kumo. In a nutshell, the signal to go long in Kumo breakout trading is when price closes above the prevailing kumo and, likewise, the signal to go short is when price closes below the prevailing kumo.
The entry for the kumo breakout trading strategy is simple – when price closes above/below the kumo, the trader places a trade in the direction of the breakout. Nevertheless, care does need to be taken to ensure the breakout is not a “head fake” which can be especially prevalent when the breakout takes place from a flat top/bottom kumo. To ensure the flat top/bottom is not going to attract price back to the kumo, it is always advisable to look for another Ichimoku structure to “anchor” your entry to just above/below the kumo breakout. This anchor can be anything from a key level provided by the chikou span, a kumo shadow or any other appropriate structure that could act as additional support/resistance to solidify the direction and momentum of the trade.
Kumo breakout traders also make good use of the leading kumo’s sentiment before committing to a trade. If the leading kumo is a Bear kumo and the kumo breakout is also Bear, then that is a very good sign that the breakout is not an aberration of excessive volatility, but rather a true indication of market sentiment. If the leading kumo contradicts the direction of the breakout, then the trader may want to either wait until the kumo does agree with the direction of the trade or use more conservative position sizing to account for the increased risk.
The exit from a kumo breakout trade is the easiest part of the whole trade. The trader merely waits for their stop-loss to get triggered as price exits the opposite side of the kumo on which the trade is transpiring. Since the trader has been steadily moving their stop-loss up with the kumo during the entire lifespan of the trade, this assures they maximize their profit and minimize their risk.
Being a “big picture” trend trading strategy, the stop-loss for the kumo breakout strategy is placed at the point that the trend has been invalidated. Thus, the stop-loss for a kumo breakout trade must be placed on the opposite side of the kumo that the trade is transpiring on, 10 – 20 pips away from the kumo boundary. If price does manage to reach the point of the stop-loss, the trader can be relatively assured that a major trend change has taken place.
Take Profit Targets
While traditional take profit targets can be used with the kumo breakout trading strategy, it is more in-line with the long-term trend trading approach to simply move the stop-loss up/down with the kumo as it matures. This method allows the trade to take full advantage of the trend without closing the trade until price action dictates unequivocally that the trend is over.
In the Weekly chart in Figure VI below for AUD/USD we can see a bearish kumo breakout taking place at point A. We also see that that leading kumo is distinctly bearish as well, which acts to confirm our breakout sentiment. Given that price is exiting from a flat-bottom kumo and that we want to reduce any risks of entering on a false breakout, we look for a close below the last chikou span support at .7600 before entering. The close we are looking for is achieved shortly thereafter at point B and we enter short.
For our stop-loss, we follow the kumo breakout guideline of placing it 10 – 20 pips away from the opposite side of the kumo where our breakout is taking place. In this case, we place it 20 pips away from the top of the kumo above our entry candle at point C (.7994).
Once we place our entry and stop-loss orders, we merely wait for the trade to unfold while continually moving our stop-loss down with the prevailing kumo. Given that we are using the Weekly chart as our execution time frame, we prepare ourselves for a very long-term trade. In this case, nearly two years later, price rises enough to break out of the kumo to the other side, where it triggers our buy order some 20 pips away at point D netting us over 1100 pips in the process.