Ichimoku Cloud with RSI

The Ichimoku Cloud with RSI indicator is a trend-following tool that combines the comprehensive trend-identifying capabilities of the Ichimoku Cloud with the momentum filtering of the Relative Strength Index (RSI). It aims to provide traders with high-probability entry signals by ensuring that trend direction, support/resistance levels, and momentum are all aligned.

Usage

The indicator generates trading signals based on the confluence of several Ichimoku components alongside an RSI filter.

Long Positions A long entry is identified when:

• The Tenkan-Sen (9-period average) is above the Kijun-Sen (26-period average).
• The Chikou-Span (lagging line) is above the price from 26 bars ago.
• The current price is trading above the Kumo Cloud (Senkou Span A and B).
• The RSI is below 50, suggesting there is still room for upward momentum before reaching overbought conditions.

Short Positions A short entry is identified when:

• The Tenkan-Sen is below the Kijun-Sen.
• The Chikou-Span is below the price from 26 bars ago.
• The current price is trading below the Kumo Cloud.
• The RSI is above 50, suggesting potential for downward movement from a neutral or slightly overbought position.

Details

Developed by Goichi Hosoda in the late 1960s, the Ichimoku Cloud provides a holistic view of price action. This implementation refines the traditional signals by adding an RSI filter.

• Tenkan-Sen & Kijun-Sen: These act similarly to moving average crossovers but use the midpoint of highs and lows over a specific period.
• Kumo Cloud: Formed by Senkou Span A and B, the cloud is projected forward to forecast future areas of support and resistance.
• Chikou-Span: A momentum indicator that compares current price action to historical data.

By integrating the RSI, the script filters out signals where momentum might be overextended, seeking more stable entries within an established trend.

Settings

General Settings

• Show Date Range: Toggles the backtesting period visibility/constraint starting from June 2022.
• Tenkan-Sen Bars: The period used to calculate the Tenkan-Sen (Default: 9).
• Kijun-Sen Bars: The period used to calculate the Kijun-Sen (Default: 26).
• Senkou-Span B Bars: The period used to calculate the second line of the cloud (Default: 52).
• Chikou-Span Offset: The number of bars the lagging line is shifted back (Default: 26).
• Senkou-Span Offset: The number of bars the cloud is shifted forward (Default: 26).
• Long Entry: Enable or disable long signal execution.
• Short Entry: Enable or disable short signal execution.

FAQ

How do I use the Ichimoku Cloud with RSI?

You can use it to identify trends by looking at price relative to the cloud and confirm entries when the Tenkan-Sen crosses the Kijun-Sen while the RSI remains in a favorable zone.

What timeframes are best for this tool?

While versatile, this combination is often used on mid-to-high timeframes such as the 45-minute or 1-hour charts for assets like SOL, BNB, and ETH.

How can I access this script?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.