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[Kumo Trader]

OK everyone,

Here is how the Analysis Challenge will work.  We are FIRST going to
spend time working and analyzing offline charts from an unknown
currency pair (I just love mysteries, don't you?!).  I have already
uploaded 5 charts for this currency pair, which are displayed below.
They are the ones that start with the
time frame (e.g.: Weekly, Daily, 4H, etc.)  Once I have received all
your answers to the first "challenges" and everyone has put their "two
cents" in, I will then send out the next set of 5 charts for the same
currency pair.  The next set of charts will reflect the price action
that has transpired since we looked at the first 5 charts.  This way we
can play the "what will price do?" game and see how accurate we were in
our analysis.

So - some rules of the game:

1) Please do NOT try to identify which currency pair we are analyzing.
By concentrating on only the charts in front of you and not knowing
anything about the dynamics of the particular pair or any fundamentals,
we can better hone our analysis skills for the known currency pairs we
trade later on.

2) Try to respond with your answers to the challenges within at least
24 hours.  We have a very international group here and we are all in
different time zones, but 24 hours should allow us all to get our
answers back and keep up the momentum.

3) Try to keep your answers relatively short and concise.  This will
keep the thread manageable and let everyone get their input in without
a huge amount of interpretation.

4) Understand that this portion of the Challenge is strictly
educational.  We are not concerned with who came up with the "best"
answer, only that we all learn from each other and keep a very open
mind.  Seeing how others interpret the same chart is always an
eye-opening experience, so be open to that and let's keep our egos out
of this.

I plan on following this currency pair for as long as it takes for us
to cover the main points of analysis, which are:

- Multiple Time Frame Analysis
- What type of trader are we today?
- Support and resistance structures
- Entries
- Exits
- Position sizing considerations

SO - Down to business!  Your first challenges are below:

CHALLENGE #1

What is the value of studying more than one time frame when analyzing
the Forex?

CHALLENGE #2

For each of the 5 charts you have in front of you, categorize the
sentiment (e.g.: Bull, Bear or Neutral) for each one.  Back up your
sentiment with reasons, but be concise.

Once I receive your answers to the two Challenges above, I will then
provide a follow-up challenge using the same charts that will provide
us with the answer to "What type of trader am I today?"

See the charts at the end of this post...

Looking forward to your answers!

- Ian

[attachment deleted by admin]

[Kumo Trader]

-- THE POST BELOW WAS COPIED AND PASTED FROM OUR PREVIOUS FORUM ON GOOGLE GROUPS --

Hi Phillip,

Well done!  See my specific comments below your answers...

On Nov 9, 5:36 am, "Philip Landry" <Plandr...@yahoo.com> wrote:

> Hello, My answer to question #1: If I am looking for a short day trade
> or a fresh trade to enter, I will start with a 5m or 15m chart and
> confirm my entry point with the 30m, 60m, 1h and sometimes 4h.  When I
> am using the daily for a longer position, I will always confirm it with
> the weekly and monthly, so I would say that I use the different time
> frames to confirm my position, or vise-versa if I think that the
> position I am in is coming to an end.

I think you are confirming one of the things I am looking to hear,
which is that we FIRST look at the higher time frames to see what the
overall sentiment/bias is, THEN we ratchet down to the lower time
frames to see what our execution time frame will be.  By approaching
the market in this fashion, we always put the overall sentiment in our
favor and then look for opportunities that (ideally) match that
sentiment at lower time frames.

The REAL power of using multiple time frames is that it allows us to
"fine-tune" our entry and exit strategy because it allows us to see
price action at a lower level of detail.  For instance, we may see that
a key level has been breached on the Daily chart and want to go long.
But before going long, we must first move down to lower timeframes to
see how price is behaving and whether or not we are going to encounter
any resistance structures on those timeframes.  Is there a 4H kumo we
are trapped in?  Is price looking like it is consolidating at a level
other than 150.75 and can this give us a more accurate key level from
which to work?

By considering what Ichimoku tells us on at least 3 time frames before
committing to any entry (and often for more precise exits) we ensure we
are not caught "unawares" by any pitfalls on lower timeframes.

> My answer to question #2:
> 1h-bearish with tenkan-sen/kijun-sen cross, fresh downward kumo and
> chinkow nicely below price.

Perfect!  Nailed it!

> 2h-bearish to neutral, I say that because of the shape of the downward
> kumo, looks like she's leveling out.

Good eye.  However, given the fact that all the "biggies" are lining up
Bear on this I would still call this chart's sentiment Bear.

> 4h-It appears that the bullish pattern is coming to an end with tenkan
> below kijun cutting through kumo and chinkow below price, tenkan and
> almost through kijun.

I agree with your comments on this.  The Bull items we need to consider
are:

1) Bull kumo
2) Overall "light" uptrend on this time frame.

I would consider the overall sentiment on this Bear, though I would not
trade right now either way given the location of price in the 4H kumo.

> Daily-bullish, chinkow above price, kumo looks good, tenkan looks to be
> forming a fresh upward pattern from kijun.

Right on!  Well done.  We also add to our bullish view by the fact that
price is good distance away from the bull kumo, which indicates a solid
uptrend.

> Weekly-neutral to possibly turning bullish with chinkou above price,
> tenkan and kijun.  Tenkan above kijun and price above kumo. we'll see
> what happens with tenkan and kijun with the kumo.

Very insightful, Phillip.  You can see how we are currently in a period
of long-term consolidation, starting roughly around August of 2004.
More recently, we've entered an uptrend (which is even more clear on
the Daily chart - see how useful MTF analysis is?!).  We are in a solid
bullish configuration and have just exited the Weekly kumo which is a
HUGE signal of further strength.

However, given that chikou span, tenkan-sen and kijun-sen are all still
below/within the kumo, we need to be careful.  In addition, the kumo
itself is of the flat-top variety, which can act like a rubber band
until price closes above another key level a decent distance away from
the senkou span B.

Great work, Phillip! 

[Kumo Trader]

-- THE POST BELOW WAS COPIED AND PASTED FROM OUR PREVIOUS FORUM ON GOOGLE GROUPS --

On Nov 9, 6:07 am, "draco" <heroisdo...@gmail.com> wrote:

> #1
> Multiple time frames allow the trader to see the price direction,
> momentum, and support/resistance structures on different time frames.
> Features of longer time frames are more significant and durable than
> those on shorter time frames. Usually the trader will make his trading
> decisions based on the slower frames, but select his entry and exit
> points based on the faster ones. For example, the trader will look for
> alignment of trend direction on different time frames before making an
> entry. Or he may wait for a market pullback on the faster frames before
> making his entry. With IKH, he can also take the support/resistance
> information from different frames and combine it directly in order to
> set his stop-loss and take-profit levels.

Man!  Textbook stuff, Draco!  Very well thought out and put!

> #2

> 1H
> Bear. Tenkan Sen has crossed Kijun Sen downwards. Price has crossed KS
> downwards. Chinkou Span is well below price. Price has closed below
> Kumo, and has bounced downwards off Senkou Span B resistance. Future
> Kumo is sloping downwards.

Excellent!

> 2H
> Bear. Tenkan Sen has crossed Kijun Sen downwards. Price has crossed KS
> downwards. CS does not confirm - it is neutral, hovering over price.
> SSA has crossed SSB downwards - a bearish kumo twist. Kumo resistance
> has been confirmed with a bounce off SA by price, as well as by close
> below kumo.

I agree with your Bear assessment, though I don't see the chikou span
hanging over price.  I see it being below price and within the kumo,
which makes it a weak bear signal.  We also have a mature bearish kumo
in-place (not so much a twist, as that happened several days ago).

> 4H
> Neutral, slightly bearish. Price moving inside kumo. TS and KS in a
> twist, unclear. CS below price and TS below KS, so somewhat bearish
> tendency. But neutral because of price between SSA and SSB.

Agreed.  Trading within the kumo is always a risky prospect, even with
an overall bearish tone.

> Daily
> Bull. Kijun Sen and Kumo, both acting as support for price, are clearly
> trending upwards. SSA has twisted above SSB recently. Chikun remains
> above the price line. TS remains above KS. Kumo shadow suggests
> short-term upturn soon.

Nicely researched!  The SSA/SSB twist happened quite a while ago, so I
would say we are in a very mature bull kumo, but I think that's what
you're saying as well, right?    Kumo shadow could indeed provide
potential support for this pair - good call!

> Weekly
> Cautiously bullish. Recent upward crossover of TS over KS, but cross
> took place below kumo. Recent cross of price by KS. CS favourable.
> Price has just closed above Kumo, but I would wait for one or two
> candles' confirmation before pronouncing bull trend. Kumo structure has
> flat-top and longer-term downward bias.

Well done!  I agree with your assessment.  We realize that price
closing above the Weekly kumo is a very significant bull signal, but
you are wise to look at the whole picture as there are still some
"stumbling blocks" in the way...


Great job on your analysis, Draco! 

[Kumo Trader]

-- THE POST BELOW WAS COPIED AND PASTED FROM OUR PREVIOUS FORUM ON GOOGLE GROUPS --

On Nov 9, 6:10 am, "GeorgeW" <PWol...@gmail.com> wrote:

> Hello,

> > CHALLENGE #1

> > What is the value of studying more than one time frame when analyzing
> > the Forex?1. Bigger picture, ie: on H1 it can look very bearish, but on H4 / D1
> we see that this is only a retracement, and the trend is bullish.
> 2. Better entries, ie: we see H4 close below Kumo, then smaller calndle
> that goies up, bounces from Kumo, then some smaller ones, so we can go
> to H1 (or H2) and position ourselves better (below H1/H2 Kumo).
> 3. More precise target / SL levels, ie: using D1 we go down to H4 to
> use Chinkou to draw all important levels (be it stop-loss levels, or
> important levels of resistace / support, which could become our
> targets). We can see some "cluster areas" clearer.

Man!  You guys are all doing awesome!  Very nice summary.

> > CHALLENGE #2

> > For each of the 5 charts you have in front of you, categorize the
> > sentiment (e.g.: Bull, Bear or Neutral) for each one.  Back up your
> > sentiment with reasons, but be concise.D1 - Bull. I see bullish sentiment. Kumo is bullish, price is trending
> nicely above Kumo, Chinkou is above the price. Slight worry would be
> the cross of Kijun and Tenkan. Additional worry is the price from
> Decmeber 2005: it makes a resistance area.

I agree with your assessment on this, though I don't have the same
worry about the tenkan-sen/kijun-sen cross.  The tenkan-sen bounced
nicely off of the kijun-sen which serves to actually confirm that as a
solid point of resistance and should bolster our bullish outlook.

> H4 - Neutral. Here is more to worry. Although Kumo is bullish, the
> price is inside Kumo, Chinkou is below the price, and we also see
> bearish cross of Kijun-Tenkan.

Agreed.  Well done!

> H2 - Bear. The price broke through Kumo, Kumo is bearish, Chinkou is
> below the price, bearish cross of Kijun-Tenkan.

Perfect!

> H1 - Bear. The price nicely bounced down from Kumo, Chinkou below,
> bearish cross, Kumo changed to bearish.

Again - very nicely done!  You missed the Weekly chart, so you may want
to look at that as well as it has some very interesting things going
on...

> CONCLUSION:

> I wouldn't take this trade. Reasons:
> H2 - we clearly see resistance fron around Nov 6th (Chinkou Nov. 1st).
> I would like to see clear breakout below that area, 6650 or lower.
> H4 - price is still in Kumo. I would wait for breakout down from Kumo.
> Even then this could be a short trade, since 6550 seems like a strong
> support (6th, 15th, 26th of October).
> Additionally D1 looks too bullish, price may just bounce from Kumo.

Let's keep in mind that we don't yet know what type of trader we are
yet.  That's the next question!!  But that great mind of yours is
already there!  LOL.  At this point, there is no "trade" to take as we
have not yet identified the ideal time frame to trade.  Once we do
that, we can then determine how we will trade it.

> Is it too long answer perhaps?

No - you did great!   

[Kumo Trader]

-- THE POST BELOW WAS COPIED AND PASTED FROM OUR PREVIOUS FORUM ON GOOGLE GROUPS --

OK everyone.

You all did outstanding in your analysis of this "mystery" currency
pair on multiple time frames (Raffi - we would still love to hear from
you as well!!)

Did this exercise help to solidify the power of using MTF (multiple
time frames) for you?  It's clear to see that we covered the whole
spectrum of sentiment, from solid BEAR on the lower two time frames to
Bearish-Neutral on the 4H to BULL on the Daily and Weak BULL on the
Weekly.  If we were only to look at one of these time frames, we would
only get part of the story, so that is why we MUST use MTF as part of
our daily trading strategy.

Now that you've done your analysis on these timeframes and we all agree
on the sentiment/bias for each, here is the next Challenge:

CHALLENGE #3: Which of these time frames offers the MOST tradeable
opportunity?  When I say this, I mean that you need to identify the
time frame that offers the most potential upside, least amount of
"pitfalls" in terms of support and resistance structures and aligns
with the overall trend.

Please explain the rationale behind your answer.

I will leave this as a single challenge, as I think this one will
generate a lot of discussion!

- Ian

[Kumo Trader]

-- THE POST BELOW WAS COPIED AND PASTED FROM OUR PREVIOUS FORUM ON GOOGLE GROUPS --

i will pick the 4hour, coz we have the weekly kind of bullish, the
daily bullish, the 1h and 2h are bearish but its representing the
momentum in this case, coz the kumos are horizontal and thin, easy to
follow the big picture, now the key is the 4h, coz the price is in a
very thick kumo and a break of it will  give us a strong bullish signal
and it will keep us away from pitfalls,
so i need a break and close above senkou A, and this automaticly will
provide me more bull signal: price break kijun, tenkan kijun cross, the
1h and 2h change to bull,  breathing of tenkan-kijun away from each
other on daily.

off topic: i guess i found the error in posting, once  i click on send,
then click on kumotrader, and then on the topic, in order to succeed my
post, coz i was clicking  on refresh.

see you guys later

[Kumo Trader]

-- THE POST BELOW WAS COPIED AND PASTED FROM OUR PREVIOUS FORUM ON GOOGLE GROUPS --

#3

Well, we have to choose out of 1H (bear), 2H(bear) and daily(bull),
since the remaining timeframes are more neutral (4H - neutral/bear;
weekly - neutral/bull). So the way I would decide is to see which of
the three timeframes gets the most support from the adjacent ones.

Clearly the daily timeframe is isolated, so I would drop it - the lower
timeframes suggest there could be quite a drop before the next upturn,
so it's not quite ready for entry. The 2H is getting contradictory
signals from the 4H and the 1H - if I enter short I could be whipsawed.
So that leaves the 1H timeframe as the most promising one - its bearish
trend is "protected" by the similarly bearish trend on 2H frame.

[Philip Landry]

Answer to challenge #3
I would say that if I really wanted to trade this pair now, I would use the daily time frame.  I believe this to be the best in the fact that there is a clearly defined visual trend with the kijun forming a new level of support and chinkou is still in a good position above the price.

[Philip Landry]

Wow, I just read Raffi's and Draco's post, this will be wild, I can't wait.  Hey George, you want me to bring you a coffee??

[Kumo Trader]

-- THE POST BELOW WAS COPIED AND PASTED FROM OUR PREVIOUS FORUM ON GOOGLE GROUPS --

i will pick the 4hour, coz we have the weekly kind of bullish, the
daily bullish, the 1h and 2h are bearish but its representing the
momentum in this case, coz the kumos are horizontal and thin, easy to
follow the big picture, now the key is the 4h, coz the price is in a
very thick kumo and a break of it will  give us a strong bullish signal
and it will keep us away from pitfalls,
so i need a break and close above senkou A, and this automaticly will
provide me more bull signal: price break kijun, tenkan kijun cross, the
1h and 2h change to bull,  breathing of tenkan-kijun away from each
other on daily.

off topic: i guess i found the error in posting, once  i click on send,
then click on kumotrader, and then on the topic, in order to succeed my
post, coz i was clicking  on refresh.

see you guys later

Hey Raffi!

Nice analysis.  Your mentioning that the 4H is a key chart to keep an eye on is very true.  Once we can get a break above the 4H kumo, it will also bring the lower timeframes into alignment with the overall up trend on the higher time frames.  So well done!  You are definitely putting all the pieces together and using multiple time frames to get the whole picture, which is exactly what this exercise is all about.

In my opinion, the Daily chart is currently the "most ripe" for trading.  I say this because we do not have any complex support structures (like a kumo) standing in our way for more upside, the chart is firmly Bull, and the always-critical kijun sen is close at hand and will provide an excellent stop-loss point (just below), making entering long somewhere above .6710-.6730  a very low risk/high reward trade. 

In addition, the 4H chart has some items that need to be rectified that a break above the kumo top will not automatically provide.  For instance, a close just above the top of the kumo would still not give us a bullish tenkan sen/kijun sen cross since price would probably not exceed the .6726 high set on 11.07.  Remember that the tenkan sen measures the average of the highest high and lowest low of the last 9 periods and the kijun sen does so for the last 26.  Thus, unless our break above the kumo spikes a good deal higher than the high of the last 9 periods (.6726 in this case) the tenkan sen will not move and we will still be in a bearish tenkan sen/kijun sen cross.  The chikou span on the 4H may or may not cross above price if we close above the 4H kumo, as it all depends upon how fast we move up over how many days, so that's another bit of a wild card.

Well done, Raffi.  I really like the way you are thinking about the charts as it shows that you are now looking at things from both an MTF as well as an Ichimoku perspective!  Just make sure you keep in mind the calcs for the tenkan sen and kijun sen when looking for crosses as the devil is in the numbers sometimes...

- Ian

[Kumo Trader]

-- THE POST BELOW WAS COPIED AND PASTED FROM OUR PREVIOUS FORUM ON GOOGLE GROUPS --

#3

Well, we have to choose out of 1H (bear), 2H(bear) and daily(bull),
since the remaining timeframes are more neutral (4H - neutral/bear;
weekly - neutral/bull). So the way I would decide is to see which of
the three timeframes gets the most support from the adjacent ones.

Clearly the daily timeframe is isolated, so I would drop it - the lower
timeframes suggest there could be quite a drop before the next upturn,
so it's not quite ready for entry. The 2H is getting contradictory
signals from the 4H and the 1H - if I enter short I could be whipsawed.
So that leaves the 1H timeframe as the most promising one - its bearish
trend is "protected" by the similarly bearish trend on 2H frame.

Morning, Draco!

Ah - I see how you are thinking on this one.  Very sneaky!  You are correct that the two lower time frames are in Bear territory and could definitely provide more downside in the short-term, especially given the bearish tone we see on the 4H.  In terms of immediate tradeability, taking a short day trade would probably get you in the market the fastest, so excellent analysis!  I would like to throw a couple of cautions/questions into the mix just to get you thinking, however...

1) Overall trend is BULL and we are looking for a trade that aligns with that overall sentiment; a short would be against that trend.  This does NOT mean that we never take a trade against the overall trend, only that it is always advisable (especially for newer Forex traders) to put the probabilities more firmly on their side and trade with the trend evident on higher timeframes.

2) What would be your entry point for going short?  Where would you place your stop-loss?  What is your first price target?  Given your entry price, stop-loss and price target, what is your risk/reward ratio?

Remember - I am only playing the Devil's Advocate here and am by no means saying there is only ONE tradeable time frame for this pair.  I personally would take a Long trade on the Daily chart, but that is also partly due to the type of trading I prefer, so I am looking forward to hearing more of your views on this potential short day trade. 

Nice work,

Ian

You are doing very well with this, Draco!  Keep it up!

[Kumo Trader]

Answer to challenge #3
I would say that if I really wanted to trade this pair now, I would use the daily time frame.  I believe this to be the best in the fact that there is a clearly defined visual trend with the kijun forming a new level of support and chinkou is still in a good position above the price.

Man!  Nice job, Phillip! 

The Daily Long trade is definitely one of, if not the highest probability trade we have at our disposal in this pair.  You mentioned the key factors that make it so:  it aligns with the overall trend, the kijun sen has already shown its support and is close-at-hand to act as an anchor for our stop-loss placement and the chikou span is nicely above the price curve.  We also are trading well away from the kumo and the kumo itself has a nice upward angle, indicating further strength. 

OK, smart guy.  Here's your next question:  Where would you enter this long trade?  What would be your stop-loss and what would be your first price target?  It may be difficult to come back with specific numbers since you don't have the chart on-screen, but perhaps you could annotate the chart and re-post it to show us your thought process...

Keep in mind that you will need to be looking at multiple time frames (MTF) to tune your entry.

Great job!

- Ian

[GeorgeW]

THIS MESSAGE I HAVE COPIED FROM KUMO GROUP AT GOOGLE (i'VE POSTED YESTERDAY)

Thank you Ian, Thank you everybody. I think this is a great group!!!

OOOOOOPS! I wasn't even aware of W1 beeing posted.

OK, W1:
Mixed sentiment, but I'm bullish:
 - I'm not suggesting patterns, but couldn't resist looking at Chinkou
which formed beautiful "W".
 - Price penetrated Kumo. Bearish Kumo doesn't really concern me in
this situation
 - Cross of Kijun-Tenkan
 - Finally: Chinkou nicely above price!

OK, the direction is up.
I will wait for closure above H4 Kumo. That's it. Upon seeing it, I
could scale down to find a better entry on H1, but I doubt. You know
me, I'm solely H4 trader. I will wait for the H4, while checking H1, H2
from time to time to see how do the candles look above H1/H2 Kumo. I
would expect at least 1 bounce from H1 Kumo.

George

Forgot to add:

I will take that trade by placing buy-stop order.
I almost never enter "at the market".

Best to you all!

George

[HUNTFX]

Hello All,

I just wanted to step in and say just how happy I am to see such a powerful forum! By far, I belive that what you all are doing has to be the most powerful forum online today concerning the art of Ichimoku Kinko Hyo.

If I had to sum it all up in one word - that word would be... "Brilliant". In my opinion (for what it's worth), Ian Boersma has to be one of the most dynamic, Ichimoku Analyst/ Traders I have ever met. His pursuit of information and understanding is un-matched, so if you are partcipating here, you are participating with one of the best!

I will be "trolling" around here from time to time, putting my .02USD in, however; this project is the brainchild of Analyst, Ian Boersma. It has been a long time coming and I am elated to see this forum finally come to the frontline. My door is open to all of you, and I look forward to equilibrium.

Vincent Hunt
Ichimoku Analyst | Forex market
HUNTFX

[Raffi12]

Helloooo

Another good surprise, thanks Ian, Vincent.
i'm little bit lost here, its like first day job in a new workshop 

about my challenge#3
thanks Ian, i will try to be friend with numbers, but mannnn i dont like them, its hard to get along with them, its kind of bad habit and it will cause me some trouble in future, so i must get along with them....

congratulations again for the new KUMOTRADER FORUM.