DLavrov

Price Reversal from Kijun

FX:JPN225   Nikkei 225 Index
I wrote about a such type of signal like price reversal from Tenkan. Today we closer look at situation when price breaks Tenkan and moves lower. We have a possible reversal line which can stop price and it's Kijun (Base Line). When price reaches Kijun and bounces, we have a signal for opening a trade and joining to the main trend. As Ichimoku is a trend indicator, we must have suitable market conditions. DMI is a good indicator showing when we can trade. If ADX is above 20 or 25, we have trend market and it's right time for trading. For confirmation price reversals we use RSI .

Setup for opening Long Trades:
- price is above the cloud
- DMI is above 20-25 and confirms trend market conditions
- price reverses from Kijun
- RSI confirms price reversal
- place a pending order above the high of the signal candle
- place a stop order below the low of the signal candle or swing low

Setup for opening Short Trades:
- price is below the cloud
- DMI is above 20-25 and confirms trend market conditions
- price reverses from Kijun
- RSI confirms price reversal
- place a pending order below the low of the signal candle
- place a stop order above the high of the signal candle or swing high

For closing trades we can use trailing stop or R/R ratio 1:2 or 1:3.
Money management: risk for a trade must not be more then 2%.

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