Hi FF_Goal,
However, this also means that the tenkan and kijun line are facing resistance at both the edges of the kumo (2.53 for the tenkan line and 2.48 for the kijun line to meet their resistance). The chikou line is also facing a huge kumo from below with resistance at around 2.52. The counter is also entering a phase of relatively flat senkou span B at around 2.35, which can prove to be a strong attraction for the counter.
I noticed that you made specific mention of the Tenkan Sen and Kijun Sen meeting resistance at the kumo boundary. In my experience, the tenkan sen and kijun sen do not interact with the kumo in the same manner that the chikou span does. Why? Because the tenkan sen and kijun sen are
averages and the kumo itself is made up of two averages as well. When two averages meet in the forest, do they make a sound?
Keep in mind that PRICE is the element that finds equilibrium among all the various structures in the Ichimoku charting system, not the average of price.
The chikou span, on the other hand, most definitely interacts with the kumo (among other structures) so you are correct in keeping its relation to the kumo in the forefront of your mind at all times. In this case, there is the potential for resistance from the chikou span encountering the kumo at the 2.52 projected level you included in your post, so that is a very real level to be aware of. The flat, extended nature of the SSB at 2.52 and the fact that this level has provided resistance previously (as you point out on your chart) add to the probability of this scenario.
Not a good trade to move into as yet according to the various immediate resistance from current close of 2.44. The cut-loss price of 2.22 (a break below the kumo) is too many bids away for a comfortable reward/risk ratio.
Also, the weekly chart is showing a bearish tenkan-kijun cross though this is happening above the kumo.
However, if a trade was entered at 2.44. What should be the exit strategy?
I'm wondering why you would want to enter this trade if you, yourself, have already disqualified it as having too low of a risk/reward ratio. Yes, you always have the option of placing your stop-loss below the kijun sen instead of the kumo for a more aggressive trade, but on the time frame you posted, that is essentially the same level, so no help there in terms of risk/reward.
If I were looking to trade this equity on this time frame, I would definitely wait for the chikou span to close definitively above the kumo - period. I would not even consider entering on this time frame until that happened, at the very least.
In the end, since we don't have the benefit of seeing the other time frames for this equity, it's difficult to really weigh in on what other options you have. However, from your question about exit strategies from 2.44, it would appear you are looking to enter long without a true kumo breakout with chikou span confirmation, which is risky at best. If you don't feel comfortable waiting for the proper setup on this time frame, then perhaps you should look to a lower time frame for your trade as that will afford you a tighter stop-loss and potentially better risk/reward.
Hope this helps,
Ian
