Trading Ichimoku

From the Ichimoku chart, we can see that RUT is very overbought now.

The price level is far off the Tenkan sen. Or put it another way, Tenkan sen has trouble keeping up with the rise of RUT.

This is a follow up post on my previous RUT reading.

Following on my RUT reading, I decided to established a Vertical March Call Spread at 630/640

The rationale is that I have already ride on some profits from my Vertical March Put Spread at 570/580

If RUT does goes higher, I will suffer some losses on my CALL Spread. And I will remove it once it reaches a certain level.

But, if RUT fails to goes higher or reverse, I will be able to close off my PUT Spread and let the CALL rides the way down.

Writing this post helps to crystalize my thoughts.

My next step is to :

- Watch how RUT reacts to the rate hike.

- Establish stop levels for my MARCH CALL Spread.

I believe RUT provides a fairly good proxy to the risk appetite of the market.

When RUT starts to slow down on its advance, it is a sign that the broader market is perceiving it as more risky.