Ichimoku Kinkou Hyou (Itchy Mushrooms)

[kennynah]

GR : many thanks man...i've learnt plenty from u on this IKH...

[blid2def]

Recommended accessory to go with my posts:

[kennynah]

brudders...

lesson time again for me.... pls give your kind comments on whether i have made any blunders in my readings...

sugar canes again...



if my reading is correct....then, i made some further commentaries at my Contingency for Disaster and Recovery Site(just click on the small picture on bottom far right)

[blid2def]

Again, your probes have helped me refresh my Itchy Mushroom understanding, and also highlighted to me things that I'd too conveniently neglected in the past.

I'll refer you to these two links from the Ichi Wiki:
- http://www.kumotrader.com/ichimoku_wiki ... e=The_kumo
- http://www.kumotrader.com/ichimoku_wiki ... #Kijun_Sen

Re-read them and you'll see that the kumo edges (i.e. Senkou A & B) as well as the Kijun also serve as S/Rs, and they do not need to be flat to do so. There's a good example in the one on kumo, which demonstrates the difference between trading with traditional trend lines and with the kumo cloud edges. I'll need to look at some of my charts to see.

Damn, my freaking mind is like a sieve. Learn, forget, learn, forget. Lol.

[kennynah]

bro...i like your answer...solid...i wana skive and make u confirm my readings... u come back with more readings for me instead... u good... now LL...have to go read more... but ok lah... must match your belt colour, else, u no challenge... "on" u lah...

tx for the links...

[blid2def]

Hehe... actually I'd suggest printing out the pages on Ichiwiki (printing is a bit of a pain... I'll let you experience it yourself haha)...

[kennynah]

no need...i have a monitor that's 40 inches wide...i open up the itchy chart.... can steam just seeing the colours and cloud....hahahaha...

[blid2def]

Mushroom farmers, here's something I've observed in some charts.

Yesterday, in the Hyflux thread, I mentioned that the current kumo's thickness is an indication of the amount of support/resistance to the price movement. This is talked about in the Ichiwiki.

Here's a thread discussing kumo thickness in the Kumo traders forum. I haven't read it in detail though - just glanced through as I was looking for something that talks about the observation I'm making below:
- http://www.kumotrader.com/forum/index.p ... c,8.0.html

Unfortunately, I couldn't find answers, but anyway, here's the observation I was talking about. Remember my previous paragraph about thickness and supports/resistances? Look at this chart:



This chart illustrates what can happen when the stock gaps up/down to new historical (or hysterical? Hahaha) highs or lows, from current positions of historical highs or lows (think: good gets better and bad gets worse). Think flagpole & flag (with horizontal or drifting upward flag portion) in conventional pattern TA. These sorts of gapping actions create kumos with great thickness. Look back and you'll see that there's little or no historical S/Rs that cut through the kumo (I've gone to look at the 10-year chart also).

Why do we see such a kumo? Well, if you go back to the mechanics of it, and see that the kumo is simply bound by 2 lines (Senkou A & B) which are derivatives of the average of highest highs and lowest lows over a period of time, then you'll see why this kumo gets formed this way.

Also remember that the kumo is forward-projected 26 periods... that means that the kumo will act as the barrier on the price action 26 periods later. So this begs the question: If this is an anomaly, then does such a kumo still stand as a good gauge of S/Rs for the future price action?

Erm... before I continue... have I lost you? Hahaha...

Okay, so back to the question. When the price in the future runs into the base/top of such a kumo, we know that we're running into a kumo formed by historical gapping action. There might not be many (or any) historical S/Rs in the kumo itself, but remember we're talking about recovering from a historical drop, or falling from a historical high. The edge of the kumo still serves as a good S/R. But the inside of the kumo? I don't have an answer yet, sorry, as I need to look at more charts that have shown such gaps some time back - anyone has an idea of examples of such stocks for us to study?

So, this has been a long article with more questions than answers. Hahahaha...

[kennynah]

But the inside of the kumo?

i've read that the kumo cloud itself serve as S/R.... that means that price could gyrate within the cloud...

[blid2def]

But the inside of the kumo?

i've read that the kumo cloud itself serve as S/R.... that means that price could gyrate within the cloud...

For normal clouds, yes - and that's supported by historical price action S/Rs... think about say, a steady incline with consolidations in between. These consolidations create S/R lines which populate the future clouds, giving further credibility to the story.

But for historical gap ups and downs... I guess maybe that concept of thick cloud S/R can still work - perhaps I need to think more along the lines of trading psychology. After a historical high, it slowly takes time to drift down (if at all), as trader psychology is at work here to support the price (even though there are no historical S/Rs).