Ichimoku Buy/Sell signals.
It can be difficult to discern Buy/Sell signals on an Ichimoku chart because of the multiplicity of plots. This method of directly marking these signals makes it easier to identify them and to see their relative strength. Evaluating their worth becomes very much easier.
The colour of the SP500 plot shows whether the basic Tenkan/Kijun setup is Bullish or Bearish. (This is controlled by whether the Red line on Arco's chart is above (Bullish) or below (Bearish) the Blue line).
Arrows mark Tenkan/Kijun crossovers, the source of Ichimoku buy/sell signals.
The colour of the arrow shows whether it is a Bullish crossover (blue) or a Bearish crossover (red).
The SIZE of the arrow indicates the relative strength of the signals, based on whether they occur when the plot is above, below or in the Kumo Cloud. (Support/Resistance zone)
The trend ribbon along the bottom of the chart shows us whether the Kumo (Support/Resistance Cloud) is Bullish (shaded Green on Arco's charts) or Bearish (shaded Red) This provides another means of further evaluating the strength of any given signal.
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One big advantage of such a presentation is that it readily enables the backtesting of decades of data so that the historical profitability of Ichimoku trading signals can be directly compared with those of other systems. Backtesting also enables us to address those tricky questions such as "should weak signals be ignored?" "Should neutral signals be ignored?" "Is the Chikou
element of Ichimoku best dispensed with?" "Are 9 and 26 the optimum parameters for Tenkan/Kijun crossovers?" etc.
A couple of quick observations from the chart :- Strong signals are not necessarily followed by large movements, as at point (1). Weak signals sometimes are followed by large movements, as at point (2). I have seen it stated that "Eliminating the Chikou Span and ignoring weak crossovers
enhances the traditional Ichimoku method’s accuracy." This would mean that signals such as that at (2) would be ignored - a pity, yes?