[isatrader]

Could you elaborate on the use of the Ichimoku cloud and the thinking behind it? I think that it declines rather quickly. Take this stock as an example. I bought it on a breakout from a double bottom back in November 2019. I think it was a mistake, because in theory, there was resistance all the way back up. The decline wasn´t older than 2 years, and with that in mind, filled with viable resistances. The Ichimoku cloud is telling a different tale. But yeah, could you elaborate on how you approach it, and to which degree you would trust it?

When you bought in November the cloud resistance was only up to 136.6 by my readings, and both the top and bottom of the cloud was flattening and thinning. The cloud above that from previous weeks no longer matters. So I think you are misinterpreting how the cloud resistance works, as it moves with time.

I find it very useful when quickly scanning weekly charts if I want to see the strength of the resistance, as sometimes stocks might be breaking out into Stage 2A but only from a smallish base, which in a lot of cases is often fine if it had a Stage 4 decline before that was only short. But if a stock has had a longer decline, then the resistance will be stronger, and the cloud gives a quick way to show where it is.

Over time resistance weakens, and this shown by the thinning of the cloud, and when the price begins to close above it, the previous resistance changes to support.

Here's a good starting point for understanding it better https://school.stockcharts.com/doku.php?...moku_cloud

P.S. the mistake with this stock wasn't the resistance. It was the lack of volume on and following the Stage 2A breakout, which was only average. Breakouts at the Stage 2A point that don't have a significant volume increase often go on to form higher secondary bases for six months or more. So you get in a stock that goes sideways for many months, and hence your money is tied up. This is the opportunity cost that Stan talks about in the book that is so important.