The Kumo or Breakout Kumo cluster strategy is a strategy that can be used in multiple timeframes. The Kumo Cloud Breakout strategy is the simplest and easiest to understand the method in the Ichimoku set of systems because we simply need to look at the cloud and its position at the price to find an entry signal. Specifically, traders will observe that the price is above or below the Kumo. A BUY signal will appear when the price closes above the current Kumo, otherwise, a SELL signal will appear when the price closes below the current Kumo.

The strategy outline is like that, but first to discuss in more detail how to enter the command, how to exit, how to place stop-loss, take profit, and some specific examples in the image below.


HOW TO COMMAND

As you can see in the picture, the way to enter the command with a breakout strategy is very simple, when the price breaks out and closes on the cloud of Kumo, then enter BUY; when the price breaks out and closes below the Kumo cloud it is on SELL.

However, you should be aware that many times will be blocked by the cloud, especially the clouds that go sideways, creating fake breakouts, and your command will be hit stop loss. Therefore, to avoid this, you need to look for another tool to support your command, that tool can be the Chikou Span line or combine more resistance/support breakout close to the crowd. current cloud or looking for price force when breaking out of the Kumo.

WHEN DOES THE ORDER GO OUT

Exit with the Kumo breakout strategy is arguably the easiest in the trading process. Traders just need to wait for either hit stop loss or hit take profit. How to place stop loss and take profit, continue the following part.

HOW TO SET STOPLOSS

If trading in the breakout style of Kumo, the stop loss must be placed on the other side of the cloud. Specifically:

If the price breaks down to the Kumo, then place the stop loss above the cloud about 10-20 pips.

If the price breaks up to the Kumo, then place the stop loss below the cloud about 10-20 pips.

If the price hits this stop loss range, it is highly likely that the price has reversed.

HOW TO SET TAKE PROFIT

Following this strategy, we will utilize the power of the trend to maximize profits, so we will not take profits until there is a signal from the price action or the price pattern signals the end of the trend. and reversing.

The strategy part is finished, the following are illustrations to give you more understanding of this Kumo breakout strategy.


Let's analyze this case study together, with AUDUSD we see price has dropped and cloud breakout at point A gives SELL signal. However, in case of a false breakout, we should consider whether the price is breaking the resistance/support at it, if so it is a plus point to enter command.

We will enter a SELL command at point B when the next candle closes. Place the stop loss at point C 20 pips above the cloud.

At what point will the order be exited? Notice, when the trend ends, the price will breakout and go up to the Kumo cloud. Hence, we shall wait for the price reversal to close above the Kumo. Point D is the exit point that matches this criterion.

In short, in this case, the trader will wait for point A (cloud breakout), enter an order at B, place a stop loss at C, and take profit at D.

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