Ichimoku Forex Trading Strategy

The Ichimoku forex indicator is quite versatile and often used as a complete trading system.

Ichimoku provides us with support/resistance, momentum and trend direction.

The Ichimoku Forex trading strategy allows us to isolate higher probability trend trades in the currency market and it can be aptly adopted among novice and pro traders alike.

Chart Setup

MetaTrader 4 Indicators: Moving Average.ex4 (Parameters Modified; Shift=3, Style=Magenta), Ichimoku.ex4 (Colors Modified; #0=None, #1=None, #2=None, #3=None, #4=None, #5=None, Colors Width Modified; #1=2, #6=2), i_Trend.ex4 (Inputs Variable Modified; Bands_Period=60, Bands_Deviation=3, Power_Period=26, CountBars=30000)

Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour, 4-Hour, 1-Day, 1-Week, 1-Month

Recommended Trading Sessions: Any

Currency Pairs: Any pair

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Buy Trade Example: AUD/USD (Australian Dollar / US Dollar), H1 Chart

Fig. 1.0

Strategy

Long Entry Rules

Initiate a buy entry if the following indicator or chart pattern gets put on display:

  • If the thistle line of the Ichimoku custom indicator crosses below the magenta 14 SMA Metatrader 4 indicator line as illustrated on Fig. 1.0, the general market sentiment is said to bullish i.e. a trigger to buy the stipulated forex pair.
  • If the lime green line of the i_Trend custom indicator crosses above its red line as shown on Fig. 1.0, price is said to be pressured higher, therefore it is a trigger to go long on the currency pair of interest.

Stop Loss for Buy Entry: Place stop loss 2-5 pips below the previous swing low point.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit if the following rules or conditions takes precedence:

  • If the thistle line of the Ichimoku custom indicator intersects the magenta 14 SMA indicator line while a bullish trend is running, it is pointing to a likely bearish reversal, therefore an exit or take profit is duly advised.
  • If the lime green line of the i_Trend forex indicator crosses below its red line during the course of a bullish trend (see Fig. 1.0), bulls are said to be leaving the market in their droves i.e. a trigger to exit or take profit at once.

Sell Entry Rules

Enter a sell order if the following holds true:

  • If the thistle line of the Ichimoku custom indicator crosses above the magenta 14 SMA forex indicator line as seen on Fig. 1.1, the overall market sentiment is said to bearish i.e. a trigger to sell the designated forex pair.
  • If the lime green line of the i_Trend custom indicator crosses below its red line as exemplified on Fig. 1.1, price is said to be dragged lower, thus a signal to sell the currency pair of focus.

Stop Loss for Sell Entry: Place stop loss 2-5 pips above the previous swing high point.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following takes center stage:

  • If the thistle line of the Ichimoku custom indicator intersects the magenta 14 SMA indicator line during a bearish trend, it is signaling to an apparent bullish reversal, as such an exit or take profit stance is highly recommended.
  • If the lime green line of the i_Trend forex indicator crosses above its red line during the course of a bearish trend (refer to Fig. 1.1), more and more bears are said to be closing their market orders i.e. a trigger to exit or take profit forthwith.

Sell Trade Example: AUD/USD (Australian Dollar / US Dollar), H1 Chart

Fig. 1.1

Free Download

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About The Forex Technical Indicators Used

The Ichimoku chart indicator is a complete trend trading system.

The creator of the indicator, Goichi Hosada, introduced Ichimoku as a “one glance” indicator.

In a few seconds you are able to decide whether a tradable trend is present or not.

The 14 SMA (Simple Moving Average) is a technical analysis indicator that smoothens out currency pair price data by constantly creating an updated average price.

The i_Trend custom indicator is a trend following system that is wrapped within an indicator window, comprising of two lines (red and lime green) that overlap each other to yield trend signals.

Easy Installation

Start using this forex strategy in just 5 minutes. Click here to get started now.

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