Trading Steem with the Ichimoku Cloud.
Describe the five main components of the Ichimoku Cloud: Tenkan-sen, Kijun-sen, Senkou Span A, Senkou Span B, and Chikou Span. How does each component contribute to understanding market trends and making trading decisions for the Steem token?
The Tenkan-sen is a conversion Line and calculated by combining the highest highest value and lowest value throughout the previous 9 periods. For making trading decisions for the Steem token so It shows short-term market direction and gives an indicator of present trends in the market. If the STEEM token price crosses above the Tenkan-sen, it may suggest an uptrend short-term trend, while crossing below it may suggest a downward trend.
The Kijun-sen, also referred to as the Base Line and it is calculated by combining the highest high and lowest low over the past 26 periods. In trading sessions, it serves as a long-term trend indicator. For making trading decisions for the Steem token, when the price of the STEEM token above the Kijun-sen, it signals a bullish market behavior, whilst a price below it suggests a bearish trend. Furthermore, the Kijun-sen is frequently used to confirm the market patterns which is indicated by the Tenkan-sen.
Senkou Span A, also known as Leading Span A, it is estimated by taking a combination of the Tenkan-sen and Kijun-sen and projected 26 times forward. It is an important part of the "cloud" (Kumo) in trading, serving as a dynamic support or resistance level. For making trading decisions for the Steem token, when Senkou Span grows, it indicates probable bullish strength for STEEM, while the decline indicates a bearish trend.
Senkou Span B, also known as Leading Span B and it is determined by taking the average of the highest high and lowest low over the previous 52 periods and showing it 26 periods forward. This produces the cloud's second border known as Kumo indicating a higher level of support or resistance. For making trading decisions for the Steem token, when Senkou Span B grows, it suggests a longer-term upward trend in STEEM, whereas a dropping Senkou Span B signals a bearish trend.
The Chikou Span referred to the Lagging Span and its shows the asset's current price presented 26 times past. It helps confirm market patterns. For making trading decisions for the Steem token, when the Chikou Span is above the price action, it confirms the STEEM bullish trend, while being below it indicates a downward trend. It is also useful for detecting possible trend reversals levels.
Using a historical chart of Steem/USDT, analyze the trend direction based on the Ichimoku Cloud. Discuss whether the market is in an uptrend, downtrend, or consolidation phase. Provide specific examples of how the cloud signals potential buying or selling opportunities.
The below image is the Steem/USDT price chart formed by the Ichimoku Cloud uptrend pattern in February 2024. We can see the price has crossed the cloud resistance level above and Tenkan-sen crosses above to the Kijun-sen which indicates a possible bullish trend. Further we see that the price went to the upside. When price crosses the cloud above and Tenkan-sen crosses above to the Kijun-sen, this has indicated a bullish potential in the market and has buying opportunity.
The below image is the Steem/USDT price chart formed by the Ichimoku Cloud uptrend pattern in June 2024. Here, we can find that the price has crossed the cloud support level below and Tenkan-sen crosses below to the Kijun-sen which indicates a possible bearish trend. Further we see that the price went to the downside. When price crosses the cloud support level below and Tenkan-sen crosses below to the Kijun-sen, this has indicated a bearish potential in the market and has Exit or short sell opportunity.
The below image is Steem/USDT price chart formed Ichimoku Cloud consolidation phase between November 2023 to January 2024. Here, we can find that the price is moving around the cloud and Tenkan-sen is frequently crosses the Kijun-sen. This situation indicate the Ichimoku Cloud consolidation phase. Ideally there is no opportunities for buying or selling in consolidation phase. Hence, to know the opportunities for buying or selling, we need to wait till the end of consolidation phase which can be completed when price is above for buy or below the cloud for sell and Tenkan-sen crosses the Kijun-sen above for buy and below for sell.
Explain how the Ichimoku Cloud can be used to identify support and resistance levels. Use a real example of Steem price action where the cloud acted as dynamic support or resistance, and how this helped in predicting a reversal or continuation of the trend.
The Ichimoku Cloud is a useful instrument for determining market support and resistance levels. The cloud is made up of two lines: Senkou Span A and Senkou Span B, which are plotted 26 periods into the possible future. The space between these two lines defines the Kumo, or cloud. In the below example I have darken the cloud color to give proper visibility for the support and resistance level.
When asset price is below the cloud then the cloud acts as a resistance zone wherein the first line of cloud acts as minor resistance and second line of the cloud acts as a major resistance. Similarly, when asset price is above the cloud then the cloud acts as a support zone wherein the first line of cloud acts as minor support and second line of the cloud acts as a major support.
In the above example of the Steem/USDT price chart, from left we can see the price was below the cloud, the mean the cloud will act as resistance. Further we can see 2 times the price touches the cloud first line which is a minor resistance level and then the price again reverses down.
Further, the price has given the breakout the cloud second level of resistance, and then price keeps moving up. Now since the price is above the cloud hence now the cloud acts as support.
At right, we can see the price came down from above the cloud and then touched to the cloud second level of support 2 times and then reversed and went up again. This way we can identify the reversal levels along with the possible support and resistance levels.
Develop a trading strategy using the Ichimoku Cloud for the Steem token. Outline your entry and exit points based on key signals, such as the crossover of Tenkan-sen and Kijun-sen, the position of price relative to the cloud, and the behavior of the Chikou Span. Support your strategy with a real chart example.
The below is my simple trading strategy using the Ichimoku Cloud for the Steem token.
In the image from left, the price was above the cloud means the market is in a bullish phase. To confirm the market trend, wait till the crossover of Tenkan-sen and Kijun-sen.
Next We can see that the Tenkan-sen crosses the Kijun-sen from above to below. This indicates the possibility that the market will decline. Here we predicted the possible upcoming market trend. To confirm this upcoming trend, now wll wait for the price to breakout to the cloud below to confirm the downtrend.
Next, we see the price has breakout to the cloud to below. Here we can exit the trade if previously bought and hold or can place a short sell. The stop loss will be just above the cloud second resistance level.
Then, we see Tenkan-sen cross the Kijun-sen from below to above. This indicates the possibility that the market will be bullish. Here we predicted the possible upcoming market trend. To confirm this upcoming trend, now will wait for the price to breakout to the cloud to confirm the uptrend.
Next, we see the price has breakout to the cloud to above. Here we can exit the short sell trade if previous brought and hold or can place fresh buy trade. The stop loss will be just below the cloud second support level.
Apply the Ichimoku Cloud to forecast future price movements of Steem. Discuss the cloud’s forecast capabilities, particularly the Senkou Span A and Senkou Span B, and how they project potential support and resistance areas. What do these forecasts suggest about Steem’s next moves?
To forecast future price movements of Steem we first understand the current Steem price movement based on Ichimoku Cloud. The circle drawn on a chart shows the breakout to the cloud, before that the price was below the cloud means the Steem market was bearish. The circle is a level where it gives breakout to the cloud resistance level which represents the possible uptrend.
Now the price is above the cloud, also we can see recently it touches to the cloud second level of support and up again. The Steem price is currently above the cloud meaning its uptrend direction, we can also see that the current Tenkan-sen crosses above to the Kijun-sen which gives additional indication about the uptrend. More on this, I have drawn the trend line by considering low points which also represent that the Steem market is currently moving up.
Steem price currently trading at 0.1859 but 0.1882 can act as a resistance level as recently we can see the price fall from this level. The future price movements of Steem based on Ichimoku Cloud, we can say that since the price is above cloud and till it remains above, also we can see the cloud is thick, then the bullish trend will continue. It is important to see the price reaction at 0.1882 as breaking to this level can take Steem price to more upside.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It should not be construed as investment advice or a recommendation to buy or sell any securities mentioned. Investing in the stock and crypto market involves risks, including the potential loss of principal. Readers are encouraged to conduct their own research and consult with a qualified financial advisor before making any investment decisions. The author of this blog is not liable for any losses or damages arising from the use of the information provided herein.
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