OptionSlam Blog

04/21/2010

Ichimoku System Trigger 2: Divergence

Filed under: Optionslam Technical Analysis — Tags: , , — g3song @ 12:17 am

This is the a different setup on the same Ichimoku template.

Simply put, in Ichimoku system, when Kijun-sen is over Tenkan-sen, it is supposed to be short. But what about price breaking up and cross Kijun-sen line?

That’s what I call divergence in Ichimoku.

Set up check list:

1. Divergence: Kijun-sen line and Tekan-sen line and price action shows opposite direction.

2. Price break Kijun-sen: Price going up and 4h bar has confirmed breaking Kijun-sen line.

3. Kijun-sen then become support. (This is the most important bar in this system). We need to make sure Kijun-sen line then become a support and continue to show the price movement trend.

Stop Loss: If a reverse candle confirmed to re-break the Kijun-sen line, we cut loss.

Take Profit: Use pivot or MA lines to take profit. Lock free trades as usual.

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