ICHIMOKU CLOUD ON NIFTY

Using the Ichimoku Cloud

A multi-faceted indicator designed to give support/resistance levels, trend direction, and entry/exit points of varying strengths. General theory behind this indicator states that if price action is above the cloud, the overall trend is bullish, and if below the cloud, the overall trend is bearish. There are also moving averages (the Tenkan and Kijun lines) which act like the MACD crossover signals with the Tenkan crossing from underneath the Kijun as a bullish signal, while crossing overhead giving a bearish signal.

Kumo, the Ichimoku Cloud

 It later became known as the 'Ichimoku Cloud' since the most characteristic feature of the indicator is the cloud (Kumo), which is designed to represent various levels of support and resistance. In developing the cloud, Hosada realized support/resistance levels were not single lines drawn in the sand, since traders were often placing their trades at various distances from the support levels. Thus, since support was many layers deep from the offers/bids around the level, he created a cloud to represent the past levels of support/resistance. The cloud is composed of the two Senkou Span lines (A&B or 1&2) which are pushed forward in time, and when the area between them is shaded in, it makes a cloud-like shape. The most basic theory of this indicator is that if the price is above the cloud, the overall trend is bullish while below the cloud is bearish, and in the cloud is non-biased or unclear. Lastly, when the price is above the cloud, then the top of the cloud will act as a general support level, and when price is below, the cloud base will act as resistance. But remember the cloud has thickness, and thus resistance does as well, which by making these thicker reduces the risk of a false breakout.

Tenkan & Kijun Lines

 The indicator goes much further than this, with using two moving average lines; the Tenkan Line and the Kijun Line, which are 9 and 26 day moving averages (exponential). The Tenkan Line is really the conversion line which is when crosses the Kijun line from underneath, is indicative of a bullish signal. When it crosses over the Kijun line from above pointing downward, it becomes indicative of a bearish signal.

Chikou Span

 There is also one last line called the Chikou Span, which is representative of today's price moved back 26 periods ago. This is where the strength of the signal comes in. If you have a bearish signal (downward crossover of the Tenkan over the Kijun) and the Chikou Span is below the base, then the signal strength increases. If you have a bullish crossover (Tenkan crosses the Kijun from underneath) and the Chikou Span is above the cloud top, then the signal strength increases.

NIFTY MONTHLY 

Senkou Span A = 5401.40 

Senkou Span B = 4434.00 

Tenkan Sen(9 days EMA)  = 5461.10

Kinjun Sen(26 days EMA) = 5125.50

Chinkou Span(Last Line)   = 4927.90

NIFTY MONTHLY TREND :As the price is between span A and span B trend is undecided ie in the clouds.

NIFTY WEEKLY 

 

Senkou Span A = 5529.50 

Senkou Span B = 5237.70 

Tenkan Sen(9 days EMA)  = 5133.20

Kinjun Sen(26 days EMA) = 5342.10

Chinkou Span(Last Line)   = 4927.90

NIFTY WEEKLY TREND :As the price is below both span A and span B trend is down ie below or under the clouds.

NIFTY DAILY

  

Senkou Span A = 5123.10 

Senkou Span B = 5274.00 

Tenkan Sen(9 days EMA)  = 4962.90

Kinjun Sen(26 days EMA) = 4943.60

Chinkou Span(Last Line)   = 4927.90

NIFTY DAILY TREND :As the price is below both span A and span B trend is down ie below or under the clouds.For short term the levels to be watched are 5123-4962-4943-4927.

NIFTY HOURLY 

  

Senkou Span A = 4898.60 

Senkou Span B = 4962.70 

Tenkan Sen(9 days EMA)  = 4981.10

Kinjun Sen(26 days EMA) = 4974.10

Chinkou Span(Last Line)   = 4927.90

NIFTY HOURLY TREND :As the price is between both span A and span B trend is undecided ie in the clouds.Below 4927-4898  the trend will be clearly down as this the last line level and ideal level to short with immediate target of 4898.Below it revise stop loss to 4898 and ride the trend if it goes there.

Conclusion :For intraday levels to be watched on Monday are 4981-4974-4962-4927-4898.