The above chart of WTI while having traded in a strong uptrend for most of the year, is seeing some ambiguous trend signals presented by the Ichimoku indicator at present.
Marked with the black arrow, we see that the cloud has moved from green to red. The lagging line (Chikou Span in Japanese) is currently trading below the price. This meets two of the three requirements for a bear trend.
The third requirement for a bear trend (the price trading below the cloud) has not yet manifested. Instead we currently see the price reversing off the cloud as it acts as support.
The ambiguity of the signals presented by the Ichimoku Kink Hyo at present assumes a consolidatory (non-directional) price environment. Trend followers using Ichimoku studies will be waiting for the following bull or bear scenarios to manifest before choosing a long or short bias to trades on the commodity.
Bull and bear setup criteria
For a bear case scenario and short bias to trades, we are looking for the price to break below the lower support of the cloud.
For a bull case scenario and long bias to trade, we are looking for the cloud to turn green once more and the lagging line to move back above the price. A cross of the lagging line above the price could also suggest the actual entry trigger for a long trade.
However while neither the up or down trends have full confirmation, we assume a consolidatory price environment for now.
Brent Crude oil
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