TK-Crosses: How To Utilize Our Alert System
To learn more about all components of the Ichimoku Cloud indicator, check out our main article here. We’ll be going through a brief summary below
The Ichimoku Cloud Strategy
The Ichimoku Cloud is a technical indicator, consisting of several components. The strategy we will discuss incorporates the following components:
The Tenkan-Sen Line: defined as the average of the rolling 9-period high and low prices
The Kijun-Sen Line: defined as the average of the rolling 26-period high and low prices
Senkou Span A: The average of the Tenkan-Sen and Kijun-Sen values (plotted 26 periods in the future)
Senkou Span B: defined as the average of the rolling 52-period high and low prices (plotted 26 periods in the future)
Chikou Span: The close, plotted 26 periods in the past
The TK-Crossover strategy primarily looks at when the Tenkan-Sen Line crossed above or below the Kijun-Sen Line. These are referred to as TK-Crossovers, and TK-Crossunders respectively. A crossover is usually seen as a bullish signal, while a crossunder is considered bearish.
It’s important to know how to differentiate between low-quality and high-quality TK-crosses. First, consider which candles you’re using on your chart. Ideally, you’ll see the same cross occurring when viewed with 1-minute, 5-minute, and daily candles. If you’re only seeing the TK-cross on one timeframe, that might be a sign you’re looking at a fakeout, and that your trade won’t pan out.
Additionally, there are a few other warning signs to look out for. For crossovers:
We want to see the Chikou Span above the past share price
It’s a good sign if the stock is trading above the Tenkan-Sen line
The stock should be trading above the cloud
The cloud should be green looking forward
The opposite goes for all of these when trading a crossunder.
Lastly, it’s important to see some volatility in the stock’s price. If it’s been flat for a while, there might not be a trend forming.
Our Screener
Needless to say, this can make it difficult to find good trade opportunities. How do you find tickers that just had a cross, and aren’t showing warning signs of a fakeout?
To solve this problem, we created a proprietary screener! In our Official Discord, we have a bot that scans hundreds of stocks, all day long, and sends out notifications of recent TK activity! So, how can I use it?
Our screener works on a 5 star scale. A 5 star alert will have matching TK-crosses on 1 minute, 5 minute, and daily candles - with zero warning signs of potential fake outs. If a signal doesn’t have crosses on all timeframes, or shows warnings of potential fake outs, it’ll go down in rating - all the way to 1 star in the worst case.
5 star alerts are relatively rare; we mostly see 4 stars during the day.
We wish you the best of luck using it, and hope you find it helpful! If you have any questions, contact us any time. Happy trading!
