DOES KUMO CLOUD MAKE RESISTANCE / SUPPORT GOOD?

If the price is above the cloud, the current trend is bullish. The top of the cloud is the first support of the price, while the bottom of the cloud will be the second support of the price.

From experience, these two levels of support are really effective, but one of them will give a signal a bit late. Usually, wait for the price of that day to end to know if the price would close below the cloud, if so, consider the possibility of a price reversal.

In contrast to the uptrend, the two Kumo cloud highs and lows also act as very good resistance.

Usually, the price will break out past the first cloud resistance/support level but then stop somewhere in the middle of the cloud. When this happens, we have to look at the current candlestick pattern to analyze if the price is giving a reversal signal.


HOW TO GET INTO THE CLOUD ORDER

The Kumo cloud is very useful to use for entry. We can enter an order now or close a part of the profit with the Kumo cloud without waiting for the MA signal.

WHAT DOES THE THICKNESS OF THE CLOUD MEAN?

The thickness of the cloud is important. The thicker the clouds, the less likely the price to break out successfully. Conversely, the thinner the clouds, the higher the chance of a breakout. Therefore, regardless of whether the cloud increases or the cloud falls, Span A is above or Span B is above the thickness matters.

The thin cloud period will give us a hint that the market is likely to reverse. Likewise, if the cloud gets thicker and thicker, the probability of a price reversal becomes less and less.

So if the clouds are thick and cannot break out, what will the price be like? According to Manesh Patel in "Trading with Ichimoku Clouds: The Essential Guide to Ichimoku Kinko Hyo Technical Analysis", the thickness of the cloud affects the state of price movement. Specifically, the thicker the cloud, the higher the probability that the market will go sideways, the price will fluctuate up and down in a fixed area.

When a particular trend occurs, the Kumo cloud will thin and the two Span A - Span B clouds of the cloud will point in one direction for the price.


CONSTRUCTION ANALYSIS MUST BE CONSIDERED TO SPEED.

The slope of the cloud also gives us a lot of useful information about the price. Specifically, the steeper the Kumo cloud is, the stronger the up/downtrend will be.

There is one more point about the flatness of Ichimoku that we have yet to explore. Those are Span lines A and B. The longer one of these lines is flat (the longer it is sideways) it will be an extremely valuable resistance/support.

As shown in the image above, in the past, at 132.63, the cloud Span B had a long sideways period, so 132.63 was a very strong resistance for the current price. Thanks to this characteristic, we can very effectively identify future resistance and support.