Trending with double cloudsThis method of analysis came as an idea after digging into cloud strategies and indicators.
The authors I studied were Nick Engles ECC11strategy, Takahashi Akita Fast cloud strategy and Sanya Vellin double small (fast) and large (slow) cloud strategy.
Engles evaluates from 4 hour and 1 hour time frame looking for trend and momentum and then to 15 minute looking for a change in momentum indicated by a Tenkan and Kijunsen cross over in the 15 minute, utilising structure and institutionals as guides to price potential.
Takahashi uses a faster cloud with less separation and watches for the price and the Tenkan and kijunsen to cross the cloud and be stacked in the correct order to indicate a buy or sell position.
Sanya uses the double cloud without Tenkan, Kijun or Chikousen and waits for price and fast cloud to cross the big cloud in the correct stack to indicate a potential.
The two latter take note of trend in the higher time scales but strong local trends are indicated by clouds in the up or down trend and stacked T over K and both over cloud the opposite for down trend, or in Sanya’s case, fast cloud over slow or fast under slow.
My idea was to utilise all three to indicate continuation or potential strong retracement
Slow cloud and fast cloud but only using Tenkan, Kijun and Chikousen lines on the slow cloud
So like Nick’s strategy we go up 2 time scales from our trading scale to start an overall view of the market trend and momentum. NB When using an iPad in TradingView there a useful tool ‘!’ To click on which shows the price progression and trend in a simple graph for the day or whatever time period you choose to work in.
So as we focus in on the 15 minute scale we may see a strong continuation indicated by fast cloud over slow, T over K and above fast cloud and price over those and Chikousen above all but lagging of course
Or we may see a strong change in direction, indicated by fast cloud crossing slow cloud. If it’s an up trend then blue Tenkan is over Red Kijun and also heading in the direction of fast cloud and above it. Price is above T & K and green Chikousen is above all but lagging. A down trend cross over see the opposite fast diving down thru slow cloud, blue below red and green plunging down and lagging.
Another handy guide is the tool that indicates the platform assessment of current trend for the currency pair of interest in terms of buy or sell, weak or strong.
So if your assessment agrees - well and good.
Attention to trend in terms of Elliot waves - higher highs and lower lows or the reverse indicated what significance one might put even where a direction change is a strong indication. A retracement may be only short lived for instance and it may be wise to wait for the change to the continuation of the long trend and see a strong indication of continuation for instance.
The strong indicates are slow to appear and not too frequent, so when you can’t find a trade indicator then one can switch to the slower cloud and use Engels strategy to find a an opening scalping trade for instance
Or one could chose to use only the fast cloud and switch on its T and K lines and find something in the mid range on an hour timescale and capture 20 or 30 pips perhaps.
Risk management and psychological discipline must remain at the forefront as usual
As a side note I just watched Baurjan Tulegenov (Ch10 and go live educator) present a seminar on the Ignite harmonics scanner 2 - it functions in a similar way to the double cloud. Strong trends are indicated by a layered cloud protocol with price and other indicator lines above and below indicating a buy/sell opportunity. The system integrates volume and has a general overarching principle of ‘swim with the whales’ ie move with the banks and institutions and not against.
We are employing probability to guide our decisions to buy and sell and the market more probably flows with the big fish. Go with and enhance the probability and manage the risk to gain and maximise profit and hold your nerve at all times.
Good talk and intro to a useful strategy,(he’s Russian but with excellent English and not overhyped and frantic like many others) I will keep his stuff in mind when using the double cloud and may integrate volume into the system.
Prosperous pip catching
Dave
