Precourse
Module 1 – How to Track Price Action on Ichimoku Charts
Module 2 – Finding Support and Resistance
Module 3 – Reading the Charts
Postcourse

Find the Short, Medium, and Long-Term Trends on Stock Charts

Viewing Ichimoku can help us see trends. Choosing the short, medium, and long-term trends is subjective. 

There are several ways of looking at each.

Short-Term Trend

Price to the Kijun-sen (My Choice)
     • Above is Bullish 
     • Below is Bearish

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Here are other ways one could define a short-term trend using Ichimoku:

Price to Tenkan-sen 
     • Above is Bullish
     • Below is Bearish

The direction of Tenkan-sen
     • Angled up is Bullish
     • Flat is Neutral
     • Angled down is Bearish

The direction of the Kijun-sen
     • Angled up is Bullish
     • Flat is Neutral
     • Angled down is Bearish

____________________________
I use price to Kijun-sen for the short-term trend. It doesn’t change as quickly as the price to the Tenkan-sen which for me changes too much to be a trackable trend. It is definable and definitive, making it easier to program than the angle of the Tenkan-sen or the angle of the Kijun-sen.
____________________________

Medium-Term Trend

Tenkan-sen to Kijun-sen (My Choice)
     • Tenkan-sen above Kijun-sen is Bullish
     • Below is Bearish

___

Here is another way you could define a medium-term trend:

Kijun-sen to Cloud
     • Above is Bullish
     • Inside is Neutral
     • Below is Bearish

____________________________
I use the position of the Tenkan-sen in relationship to the Kijun-sen line for the medium-term trend. If the Tenkan-sen is above the Kijun-sen the medium-term trend is up.
____________________________

Long-Term Trend

Price to Cloud (My Choice)
     • Above is Bullish
     • Inside is Neutral
     • Below is Bearish

___

Here are other ways one could define a long-term trend using Ichimoku:

The direction of Cloud
     • Going up Bullish
     • Going down Bearish

Senkou Stack
     • Senkou A above Senkou B is Bullish
     • Senkou B above Senkou A is Bearish

Location of Chikou Span
     • Above Price action (of 26 periods ago) Bullish
     • Inside Neutral
     • Below Bearish

____________________________
I like using the price to the Cloud as the long-term trend. You can easily see it at a glance. I found it works better for me than the color of the Cloud or the position of the Chikou Span.
____________________________

My Choices

Here are my choices for finding the trends. These are quick and easy to see and they are also non-subjective which makes them easy to program into trading programs.

Short-Term Trend – Price to Kijun-sen
Price above Kijun-sen is bullish.

Price below Kikun-sen is bearish.

Medium-Term Trend – Tenkan-sen to Kijun-sen
Tenkan-sen above the Kijun-sen is bullish.

Tenkan-sen below the Kijun-senis bearish.

Long-Term Trend – Price to Cloud
Price above the Cloud is bullish.
Price inside of the Cloud is neutral.
Price below the Cloud is bearish.

If you are a day trader then you will probably be paying more attention to the short-term trend than a trader who is planning on holding longer. Knowing the medium and longer trends can give you solace for your choices.

If you tend to hold longer, then you most likely will be most be concerned with the long-term trend.

Watching the short and medium-term trends then becomes the canary in the coal mine for the long-term trend. If the short and medium-trends have been in place for a long time then the long-term trend should be doing well. If the short and medium-term trends change from bullish to bearish and stay that way, then a bullish long-term trend could be in trouble.

Knowing the length or amount of time of the trends is just as important as their direction.

In his book Cloud Charts Trading Success with the Ichimoku Technique, David Beckett Linton explains why he likes Ichimoku for finding trends.

Why do Cloud Charts work?
Students of the subject often ask why the 9, 26 and 52 periods work best. It is not easy to say why but we do know from the history that Hosada and his team spent years in the 1930s arriving at these periods, a sort of human back-test before the age of computers. People often point out that the charts must be self fulfilling with everybody using the same periods and getting the same signals. This may be the case for certain instruments in Japan, where Cloud Charts are heavily used, but there is still a lot of room for subjective interpretation. Lots of market participants using them will see different things at different times and will behave quite differently in the way they trade the market.

Why does the technique itself actually work? again this is hard to prove, but a growing number of people are using it and this looks set to increase dramatically if the rate of adoption in dealing rooms in recent years is anything to go by. Perhaps the simplest reason of all why Cloud Charts seem to work goes back to the diagram we drew on page 30, where we identified that you could only truly know a top or a bottom retrospectively. The construction mechanism that shifts the cloud forward and the lagging line back leads to a situation where we get crossover points after a high or a low. Seeing such a trend change from the price line itself is much harder as we are left trying to imagine when the change happened. Cloud Charts will also often define a new trend much earlier than when it becomes visually clear using Trend lines. This early trend definition is another advantage that the cloud provides.

Emotionally, we have the knowledge that the top and bottom occurred, and feel we have missed the opportunity to act. The cloud presents the chart differently showing us the real event is the trend change, not the high or low that we had little or no chance of knowing. The combination of the 9, 26, and 52 session construction periods is the added ingredient that seems to make these charts work consistently well when the trend has changed. Most of all Cloud Charts are the ultimate hard coded tool for ensuring you make the trend your friend.