Ichimoku + Fundamental Analysis

Trading Systems
1

Alright, so I’ve decided since everyone else is threading/blogging about their trading systems and respective trades, I figured I’d jump into the fray and add my own.

Basically, my system is an eclectic combination of Ichimoku Kinko Hyo, and basic fundamental analysis of world markets, along with S&R and trendlines. Only a foolish trader attempts to do either technical or fundamental analysis on an independent basis, I’m sure most of us can agree on that much at least.

Sources for fundamental analysis are very varied, from the blogs here on Babypips, to what might catch my eye on the cover of a newspaper as I pass by.

If something should attract my eye from an obscure source, I will make sure to research it from a more thorough perspective. But the caveat here is the simple fact that fundamental analysis opinions are very wide spread, and differ wildly from time to time. So that’s something to look out for. I’ll be the first one to acknowledge the simple fact that I’m not always right. Alas, I’ve got a good run of incorrect analysis to go with when I get it right. But I hope to sharpen my eye for fundamentals as time goes on. I guess we’ll find out together over time just how good I can become, eh?

Anyway, back on track. I’m going to be using the Ichimoku charting indicator on Weekly and Daily charts for the most part. I may throw in some 4 hour charts, but I try to keep myself on the big picture TFs.

That’s about it for now, I’m gonna get my information for the past few trades together and post them up shortly, along with some analysis of my upcoming trades.

~Happy Pippin’, boys and girls.

2

Alright, so here are my most recent trades over the past week.

GBPCHF: I entered into a short-term long on this pair last week @ 1.6802. There was no fundamental analysis involved in this trade, I just saw price bounce off of a good S&R line, so I bought to a recent high. Short and sweet. Closed out the position @ 1.6810 when price failed to close over it’s closest S&R level. I had taken this position at the same time I had bought USDJPY, a very closely related pair, and going in both directions on correlated pairs is not something I do particularly often, for the exact reason that the rewards are rearely, if ever, worth the risks. I chock this one up to plain simple greedy trading, that I was lucky enough to overcome and close out before it had time to reverse and hurt me for a while.

USDCHF: I entered this trade at the same time as my GBPCHF position(durr), around the same basics. No real fundamentals attached to this one. Price broke out of trendlines I had drawn several weeks ago, and managed to form a channel outside of the trend. I simply waited to see the pair stop rising and hit a range for a while, and then sold once it managed to close below immediate range levels. Entered the position @ 1.1399, and am still following it as I write this out. I closed a portion of my initial position @ 1.1300, and am waiting to see if price continues downwards any further.

USDJPY: Now, this trade is on the complete opposite spectrum of analysis, for the most part. I entered into this position on the fundamental basics of these:
The Bank of Japan introduced new lending legislature(Forex Gump talks about this in his blog, Piponomics), which could potentially have an impact on inflation, driving the Yen down.
While pretty much all of the major world currencies are having their own respective issues, I feel that Japan’s straits may be just a little bit more dire than the U.S.'s. Plus, price has been strapping itself to a barely-there kumo pretty tight over the past little while, So I’m hoping for a breakout towards the top once economic things start to happen. I entered the position @ 91.37 roughly 5 trading days ago, with an SL @ 91.00. Nothing really has changed heavily, but I don’t think things will happen for a little while. Just entering into it to be prepared. Plus it gives me an opportunity to practice my hand at trading ranges up close and personal on a very basic level, without risking an important percentage of capital.

GBPUSD: I entered this trade just today with a sell limit order placed @ 1.4850, which price just hit a few hours ago. Currently have my SL set @ 1.5000. I’m hoping to tighten up my SL sometime tonight or tomorrow after the next candle start before the weekend. I entered this trade based upon several factors, including:
GBPUSD has a downwards trendline that price is very close to touching; price is moving towards kumo, but appears to lack the necessary momentum to cross over it and start a long trend. Also, fundamental analysis would suggest that when you figure UK’s economic woes vs. the U.S.'s, it’s hard not to be preparing for some buying to fuel the USD on risk appetite.

That’s pretty much it for now, I’m gonna grab a nap or something. I wiped out.

~ Happy Trails

3

Here’s the chart I’m using for my GBPUSD short.

gbpusd1.jpg700×349 28.9 KB

Thus far, price seemed to gas out of it’s fall on the one hour charts, and since it is in the middle of the kumo right now, I’ve closed out the trade @ 1.4735, and I’m going to wait for it to start pushing down again before I continue shorting it.

P.S. - One of the many benefits of being a full-time trader is I get to babysit my trades on a very close level if I so choose, though I usually try not to on too many occasions. Over management can be a little bit of a problem in the markets. So bottom line is I try not to meddle with my trades too much, but I do do it from time to time.

P.P.S. - My first major TP level for this is going to be around 1.4300. That’s the number I’m gunning for right now. Wish me luck(I’d prefer pips, but I’ll take luck).

4

Alright, so I’ve closed out all my trades for now, starting my weekend a little earlier than usual. Here’s my breakdown:

GBPUSD ~ I’ve closed out this trade for now, not liking the looks of this retrace that’s happening. I was lucky to catch a sell right at the top when the down spike occurred, and was even luckier to close out when it hesitated and pulled back, and was even luckier still to re-enter and close out decently close to the bottom. I’m going to be looking for sell signals once markets open up next week.
ENTRY @ 1.4850(short)
CLOSE @ 1.4662

USDCHF ~ Closed out my trade after the Swiss news hit, and things seemed to go pretty nuts. Glad I closed out when I did, I’m not a big fan of playing in the sandbox when the news boys are trouncing about. Although, a large part of me would have been very glad to take a larger chunk out of the move, but that’s trading for you. Can’t catch all the big fish. Getting some pretty mixed signals on this one now, so I’m probably gonna set it aside and leave it alone for a while.
ENTRY @ 1.1399(short)
CLOSE @ 1.1252

USDJPY ~ Now then, we come to my disappointment for the week. Looks like I got things wrong, at least for the moment, and price action(or lack thereof) shook me out of the trade. SUPER glad I closed out my trade when I did, though. Things went sour at a rapid rate from my vantage point. Not sure what to make of things on this pair now, after my hopeful call on the long. so I’ll have to take a closer look next week, and spend the weekend re-doing my homework. Maybe next week I’ll be able to play it smarter.

ENTRY @ 91.37(long)
CLOSE @ 91.32

~Have fun and play nice, kiddies

6

So I was lucky enough to wake up on Father’s Day with full-body soreness, and violent vomiting all over the place. Wasn’t a fun day for me. I’ve been spending most of my time for the past couple of days in bed, or crashed on the couch, begging God to end my life. Needless to say, I haven’t gotten any work done.

The only thing my system is working on right now is a sell-limit order I had placed near the end of last week on the GBPUSD @ 1.4850, with an SL @ 1.4960. Price came dangerously close to hitting my SL, but now things seem to be shaping up fairly well on the Daily charts, so I’m going to just let this one run it’s course. I’ve got a fairly large TP set @ 1.4300, and I’ll probably be adjusting this level as the pair develops, but it would be very nice if price managed to go that far.

I’ll keep you all posted as things mature.

~Peace

7

So apparently UK’s austerity issues aren’t enough to cause lack of faith in the pound quite yet, as the GBPUSD pair skyrocketed last night and took out my SL, so I’ve had to take a loss. Which hurts, because I made the same trade earlier last week, and closed out the position at a profit. But that’s trading, yeah?

GBPUSD: Short @ 1.4850
SL hit @ 1.4960

Looking for more trades. Just getting over a fun touch of food poisoning hasn’t helped matters all that much. Will post more updates throughout the week.

9

So, I was lucky enough to spot a news article today in my local paper about British Deputy Prime Minister Nick Clegg making slams about the U.S.'s involvement in the Iraq Invasion. Now, first of all, let me point out that this Iraq invasion occurred way back in 2003. That’s digging back through a lot of recent history to find something to whine about. Secondly, it’s a fairly ill-timed bash, what with PM David Cameron being in the States visiting and all.

My personal opinion? THis might very well be nothing more but another British rep hamming on about ‘The Big Bad U.S.’ in an attempt to mask floundering UK fiscal reports, and falling faith in the Pound. I think this is just a smoke and mirrors move to garner support by playing the emotional strings card.

~But hey, that’s just me.
X)

10

It would appear that the initial response to the release of the EU stress test results was positive in the markets, pushing the Euro higher. While the stress tests may or may not have had positive results, it would be very important for currency traders to bear in mind the simple fact that the EU has a debt of 2.6 trillion dollars that needs to be paid back around 2012. That’s a lot of money to be paid back in a short amount of time from an economy that has less than impressive recovery numbers.

~Just some food for thought.

11

Have you looked at how much the US has to pay back?

12

Actually, SanMiguel, believe it or not, I HAVE been keeping track of the sovereign debt-load of the U.S. Granted, I’m not from the U.S., but I have faith that I have access to the same resources as everyone else. As of this writing, the U.S. has a debt of slightly over 1 trillion. Kind of pales in comparison to the EU’s 2.6 trillion-and-growing issues. I understand that the EU recently went looking to borrow another 1 trillion a few months ago, so that’s something to keep in mind. At least the U.S. is starting to make back some of the money it lost in the last ‘collapse’.

13

i’m not putting my faith in any currency until I see employment reports start to go on the rise. Corporate profits and all that look nice on paper, but I want to see some average joes getting jobs and buying stuff before I have confidence in anything.

14

This week the Ichimoku indicators became my best friends. Last week I read and studied up on the Ichimoku and this week I tried it and had one of my best weeks ever.

JoshG I have a question. Would you let Fundamentals override trading direction and signals determined by the Ichimoku indicators? Or are you using the fundies just to confirm the indicators? Seems to me that the Ichi is telling us loud and clear what the fundamentals are, up, down, flat, etc.

I think Ichimoku is good stuff!, thanks for the thread!

PS: JoshG, thanks for posting the IchimokuWiki PDF way back on an earlier thread, it’s a great resource.

15

Hey d-pip, love the profile pic.

In my trading, technical analysis(charts + Ichimoku) have always taken precedence over fundamental analysis(news reports, etc.). A very good friend of mine that has been trading for a long while has a very simple rule of thumb: ‘When in doubt, refer to the chart’. With this in mind, it’s my personal belief that no, fundamentals do not ‘override’ Ichimoku signals. The chart is always what I go to first. Fundamentals can be wrong(and frequently are), but the charts don’t lie. they are what they are.

Fundamentals is more something I keep track of simply because I find them entertaining. I would never take a trade based upon fundamental analysis; I just like keeping up on the financial news around the globe. You can never be too educated in this field.

Hope that answers your question.

~Herpa derp.

16

Thanks for the quick answer. I like your friend’s simple rule :slight_smile:

thanks,

17

No worries, I’m always prowling around.

We’re all co-workers in a disjointed kinda way. Don’t be afraid to post any nuggets of information or personal discoveries on here. I want this to be an information-rich thread.

18

You know, I really think ichimoku deserves more respect from home traders. Ichimoku is a very precise indicator if home traders would take the time to learn it and not be intimidated when they first throw it on a chart.

All of my trade strategies revolve around ichimoku in some form. It’s great to see you guys using this great tool. If you stick to the rules and apply the signals and theory you will surely come out a winner.

19

pip bandit,

I agree! What really help me understand and appreciate the Ichimoku was reading and studying the PDF titled “IchimokuWiki”. I picked-up the “IchimokuWiki” PDF from JoshG’s post on an earlier Ichimoku thread.

I’d like to drop in a link to the PDF on JoshG’s earlier post. I think the “IchimokuWiki” is a great learning resource for anyone wanting to understand and test this very cool trading method!

thanks!

http://forums.babypips.com/attachment.php?attachmentid=12163&d=1273225177

20

Here’s one of my basic Ichimoku strategies that I use currently, just thought i’d share with the class.

Daily charts

When price closes over Kijun Sen, open two positions(e.g., 2x 1.00 lots)

Set SL to 50 pips below Kijun Sen

Set TP TARGET(NOT automatic TP) for position 1 at 50+ spread(e.g., 52 pips)

When price CLOSES OVER TP target 1, close out position 1 and move SL for position 2 to B/E +5(to cover spread and rollover)

Assuming price doesn’t retrace and hit your SL shortly after, you should be able to ride out a trend in the price action, and adjust your SL to Kijun Sen everyday until price hits it.

I’ll be putting up a chart pic soon, as soon as I can make one pretty and clear enough.

21

Here’s a couple of strategies that I’ve been working on with a friend of mine. We’ve only really discussed them and done some minor backtesting, haven’t applied forward testing yet. Maybe you guys would want to help out??

Heiken Ashi - This is another indicator that is little understood or applied in an aggressive manner, but I’ve found in the past that Heiken Ashi is very good for timing exits. It’s a good solid little indicator that tells you when the trend is drying up. It’s lack of acceptance, I believe, is due in part to the fact that most people are only interested in indicators that tell you when to enter. And Heiken Ashi is terrible for that, so it get’s swept under the carpet. Just my thoughts.

STARC bands - This is a nifty little tool we stumbled across recently. The standard settings for STARC bands are a little too close for traders like me, so I usually set it to much larger periods, but it’s a great indicator to use as a dynamic SL. If you can’t get it, let me know. I’ll post an MT4 file for it, or the link to the website I found it on, mods permitting.

22

JoshG,

How do you handle “weak and neutral” signals? For example on June 16th EUR/USD gave a “weak buy” signal with the price crossing the Kijun Sen. Would you jump in that early or only wait for “Strong buy/sell” signals?

Some of the folks have been using Heiken Ashi over on SanMiguel’s “Bollinger Bands with MAs” thread. Trading the daily chart but only in the direction of the weekly heiken ashi trend and a few other strats. HA candles seem to be really nice for trend following and everyone seem to be hearing good things about them.

thanks, I appreciate your advice & suggestions!