How Ichimoku Shows Head and Shoulder

Jun 16, ’10 10:44 PM
Author Categories TA Tags

Following is a 5 minute chart on the /ES for June 16.

This is one of the reason why I like Ichimoku so much.

We can easily spot the head and shoulder by looking at the Chikou Span on the left and trade off it as it breaks support.

Noticed how it breaks and went down from the neckline.

Related posts:

  1. Research In Motion (RIMM) : 5min chart, possible head and shoulder
  2. $SPX . Chikou Span shows possible head and shoulder?
  3. S&P 500 (SPX) : Ichimoku Chart Review as of June 15, 2010
  4. Alexandria Real Estate (ARE) : Is this a Head and Shoulder in the Making?
  5. 3PAR (PAR) : Ichimoku Chart shows Resistance

Comments

4 Comments so far. Comments are closed.
  1. Hari,
    June 18, 2010 at 8:05 pm

    Hi, a’im from Indonesia. I always see your site and i want to ask you. How to use Ichimoku for swing trading or short term…?TQ

    • iam802,
      June 19, 2010 at 12:09 pm

      Hi Hari,

      That is a very good question.

      Swing play as we know does not necessary turn into trend.

      With this in mind, we can safely ignored the use of the Kijun sen (trendline) in the chart analysis. But, if the swing does turn into trend, we may as well hold for as long as it allows.

      1. Using Daily Chart
      One way I do it is to use both candlesticks and the Tenkan sen. A reversal pattern on the candlesticks couple will be a good signal to enter.

      Upon entry, I will prefer to see the price level cut across the Tenkan sen. Hopefully, the Tenkan sen can hold it for a few days before the price cuts back across the Tenkan sen.

      I will probably do a separate post on this and supplement it with some case studies.

      2. Using Hourly Chart
      The other way to do it is to use the lower timeframe charts like the hourly chart. And if a trend is confirmed on the lower timeframe (eg. hourly chart), we can use it as an entry for the swing play.

      The same rules applies for the exit. If we use hourly chart to enter, we should use the hourly chart to exit.

      I hope to hear from fellow readers if the above make sense.

      Personally, I have not been doing lots of swing trading. I am either looking for the big trend or doing intradays.

  2. Hari,
    June 19, 2010 at 8:10 pm

    And which one the best osct for Ichimoku, RSI or Stochastics to determine entry and exit points?

    • iam802,
      June 21, 2010 at 11:27 pm

      Hi Hari,

      I don’t think it is about which oscillator is best for Ichimoku.

      Indicators track the underlying instrument (eg stock, index etc). Hence, the focus should be which oscillator works better with stock XYZ?

      There is no clear cut answer for the question. The other point to note for oscillator is that they works well when the underlying instrument is pretty much range bound. But, if you have a more volatile environment, the oscillator may not be a good indication.