How it is Being Used

The general interpretation is that if the Senkou A is bigger than Senkou B, then the cloud is green, signaling bullish conditions, while if the Senkou A is smaller that Senkou B, then the cloud is red, signaling bearish conditions.

Because of how it is calculated and taking into consideration the fact that the actual result is plotted twenty six periods ahead, it gives the trader a general idea about future area where price may find important support and resistance levels. The higher the time frame, the stronger the areas and more difficult for price to actually break it.

Senkou A it is also being considered resistance/support for the current price when around that level, so look for possible bounces or strong rejection when price is meeting the area. A break above/below this line should be followed by the cloud turning the color twenty six periods ahead and that should be your confirmation previous trend has ended. If current price is breaking above the Senkou A, then wait for the cloud to turn green twenty six periods ahead before employing bullish strategies. If current price is breaking below the Senkou A, then wait for the cloud to turn red before employing bearish strategies.

There is a strong tendency for the two elements (Senkou A and Senkou B) to be interpreted together as they are basically forming the cloud so if something is happening to the cloud then this is the result of changes in the Senkou A and B levels.

The recording that comes with this sub chapter shows you the element in details and how to be interpreted.