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The Ichimoku Report

The Ichimoku Report

2012-03-20 20:11:00
James Stanley, Currency Strategist

Ichimoku is an exciting technical trading system that was developed in Japan before World War II, with the primary goal of being able to provide the entirety of a traders’ analysis in one glance.

The system has grown massively in popularity since, as many traders feel the system to have a ‘special efficacy’ with ¥ pairs.

After publishing the Ichimoku Walk-Through article earlier in the year, we’ve had rampant demand by traders to provide real-world examples of pending trade setups via Ichimoku.

Below are some of these setups.


The past weeks’ daily bars on the Kiwi Dollar exhibit the pragmatic utility provided by the cloud. After a penetration of Kumo last week, the Kiwi has maintained support at the .8050 level, showing a propensity to resume its previous trend to the upside.

Today’s price action presents opportunity as price has come back inside of Kumo on the Daily NZDUSD chart.

This provides trades with an excellent mannerism of capping risk, in which traders can choose how aggressively they may want to embark on a Kiwi position. In the Ichimoku Walk-Through, we explain how exactly traders can look to ‘The Cloud’ for setting risk amounts.

For traders looking to be aggressive, perhaps the swing-low at ~.8050 could be the best stop. For traders wanting to be more conservative, allowing more time for the trade to ‘work,’ in the event of congestion, the bottom side of Kumo may be the most operative placement of risk (.7950).

Ichimoku_Report_March20_body_Picture_5.png, The Ichimoku Report

NZDUSD Long at Market

Stop 1: .8050

Stop 2: .7950

Profit Target 1: .8400

Profit Target 2: .8600

Yen Short (Theme)

Yen continues to weaken against most major currencies. Despite the reasons for the weakness, whether it’s stealth intervention efforts by the Bank of Japan, or Noda’s recent introduction of interviews of Japanese corporations to pre-empt potential Yen repatriation; Yen pairs continue to show traders some of the strongest trends currently available.

Combine the recent Yen weakness with Federal Reserve statements indicating ‘accommodative,’ monetary policy (which generally means the Fed is going to do what they can to help the economy grow), and traders can see potential movement in the ‘risk-on,’ trade.

Candidates to trade this theme: EURJPY, GBPJPY, CADJPY, USDJPY


During ‘risk-on,’ markets, traders will generally follow yield. If all factors are held equal, and the safety of the investment is considered a given, traders will generally choose the highest perceived potential yield as the asset of choice. This would lead traders to look at the Australian Dollar to marry up with the Yen as the Reserve Bank of Australia maintains one of the highest Central Bank Rates of modernized economies.

However, recent yen weakness has left the pair looking overbought on the Daily chart; and the recent change in sentiment regarding future Chinese growth there are many questions around the future strength of The Australian Dollar.

The more likely continued global economic expansion, with key focal points on Chinese data; the more potential strength may be found in Australian Dollars.

The price of 90.00 has been a key psychological support and resistance level in the AUDJPY currency pair’s history. During the height of economic expansion in 2006 we saw AUDJPY cross the 90 threshold to rise as high as 107; only to fall back below 90.00 in the midst of the Financial Collapse.

Ichimoku_Report_March20_body_Picture_1.png, The Ichimoku Report

Created with Marketscope/Trading Station

Another test of the 90 level was in store 5 years down the road, this time as the Federal Reserve was instituting the second round of Easing. After a quick inflection of the 90.00 level, the pair traded back down below 75.

AUDJPY is making another approach at this level, and with price ~250 pips away traders can begin lining up their game plan for trading the pair.

The recent dip in the currency pair offers a buying opportunity with numerous areas for stops.

AUDJPY Long @ Market

Stop 1: 85.00

Stop 2: 83.00

Profit Target 1: 90.00 (If profit target 1 obtained, stop will be moved to breakeven)

Profit Target 2: 95.00

--- Written by James B. Stanley

To contact James Stanley, please email Instructor@DailyFX.Com. You can follow James on Twitter @JStanleyFX.

To join James Stanley’s distribution list, please click here.

Additional Resources:

Support and Resistance – On-Demand Video Course

Money Management module -- On-Demand Trading Course

“What is the Number One Mistake Forex Traders Make?”

Trade the News – On Demand Video Course


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