Welcome to the second part of our project here and, like the name suggests, this part is introducing to you concrete strategies to be applied regardless what you are trading (binary options, currencies, indices, etc.). On the fourth part of our project I am going to treat only strategies for binary options, but until then, this second part should be interpreted as being a guide for general strategies to be employed when using the Ichimoku indicator.
The first and the most known strategy to be applied when using Ichimoku is to look for the Kinjun/Tenkan lines to cross. Now, we already know what these lines are and how they are calculated. Taking that into consideration, the first thing to do when looking at a possible shift in market sentiment is to look for the Kinjun/Tenkan lines to cross.
A bullish cross is happening when the general market is trending to the downside, and if for whatever the reason, one is looking for a possible reversing in trend, he/she should know such a reversal is not going to happen until the Kinjun/Tenkan lines are going to cross. In plain English, this means that the Kinjun line should cross above the Tenkan line, and this is considered to be a bullish cross.
Whenever you are looking for a bullish cross, the following conditions must be met first:
the cloud should be red, as this points to a downward trend;
the Tenkan should be below the Kinjun line, as this is the prerequisite for the move to the downside;
by the time the distance between the Tenkan and Kinjun line is shrinking, it is a strong signal a possible bullish cross is about to happen.
The recording that comes with this sub chapter shows you how a bullish cross looks like and how to make the best out of such a situation when trading binary options.