1. Relative Strength Index (RSI)
Overview:
The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements. It ranges from 0 to 100 and is typically used to identify overbought or oversold conditions in a market.
How to Use with Ichimoku:
Long Entry: Look for RSI to be above 30 (indicating it is not oversold) when the price is above the Ichimoku Cloud.
Short Entry: Look for RSI to be below 70 (indicating it is not overbought) when the price is below the Ichimoku Cloud.
2. Moving Average Convergence Divergence (MACD)
Overview:
The MACD is a trend-following momentum indicator that shows the relationship between two moving averages of a security’s price. It consists of the MACD line, signal line, and histogram.
How to Use with Ichimoku:
Long Entry: Enter a long position when the MACD line crosses above the signal line while the price is above the Ichimoku Cloud.
Short Entry: Enter a short position when the MACD line crosses below the signal line while the price is below the Ichimoku Cloud.
Combined Strategy Example
Here’s a brief outline of how to structure a trading strategy using Ichimoku, RSI, and MACD:
Long Entry Conditions:
Price is above the Ichimoku Cloud.
RSI is above 30.
MACD line crosses above the signal line.
Short Entry Conditions:
Price is below the Ichimoku Cloud.
RSI is below 70.
MACD line crosses below the signal line.
Exit Conditions:
Exit long when MACD line crosses below the signal line.
Exit short when MACD line crosses above the signal line.