Ichimoku breakout
Jun 18, 2021
The Ichimoku breakout indicator identifies and highlights price action that successfully breaches the Ichimoku Cloud (Kumo) in both bullish and bearish directions. This tool is designed to simplify trend-following strategies by visually signaling the exact moment a candle breaks through the cloud structure, helping traders identify potential trend reversals or continuations.
Usage
The Usage section focuses on identifying breakout signals based on the relationship between price and the Senkou Span lines.
- Bullish Breakout: A green triangle appears below the candle, accompanied by a green background highlight. This occurs when a green candle closes above the leading span line (Lead 2) while Lead 2 is above Lead 1.
- Bearish Breakout: A red triangle appears above the candle, accompanied by a red background highlight. This occurs when a red candle closes below the leading span line (Lead 2) while Lead 2 is below Lead 1.
- Alerts: Users can set alerts to be notified immediately when a cloud breakout is confirmed on the bar close, ensuring they do not miss potential entry points.
Details
The indicator calculates the standard components of the Ichimoku Kinko Hyo system: the Tenkan-sen (Conversion Line), Kijun-sen (Base Line), and the Senkou Span A and B (Lead 1 and Lead 2).
The primary logic focuses on price interaction with Lead 2 (the slower leading span) which often acts as a significant level of support or resistance. By filtering for candle color and the orientation of the cloud (Lead 1 vs Lead 2), the script aims to isolate high-probability breakout momentum rather than simple price fluctuations within the cloud.
Settings
- Conversion Line Length: Sets the period for the Tenkan-sen calculation (default 9).
- Base Line Length: Sets the period for the Kijun-sen calculation (default 26).
- Lagging Span 2 Length: Sets the period for the Senkou Span B calculation (default 52).
- Displacement: Determines how many bars forward the cloud is plotted (default 26).
FAQ
How do I use the Ichimoku breakout signals?
Signals are generated when a candle closes outside the cloud boundaries. Traders often use these as entry triggers for new trends or as confirmation of existing momentum.
Can I see the conversion and base lines?
Yes, the Tenkan-sen (Conversion Line) and Kijun-sen (Base Line) are included in the script but are set to "display=none" by default to keep the chart clean. You can enable them in the "Style" tab of the settings.
How do I get access to this tool?
You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.
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