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

How to Use Weekly Charts to See the Big Picture

When reviewing charts, we look at the weekly then the daily. Within the weather analogy, I consider the weekly to be the “season” of the chart. If the current price action is above the Cloud that is summer, below winter. If the price is inside the Cloud it is either spring or fall. A bullish Cloud with the Senkou Span A above B is considered fall, and the bearish B above A is considered spring. 

I will sometimes look at monthly charts for support and resistance zones for considering long-term investments. An investment is defined as a trade that is held longer than a year. In the United States of America in a taxable account, an investment is taxed differently than a trade. 

In my weather analogy, monthly charts are considered the weather climate.

Climate is the long-term average of weather, typically averaged over a period of 30 years.”
December 9, 2003. Climate. Wikipedia.

Daily – Current Weather
Weekly – Seasons
Monthly – Climate

 

Here is a table showing the amount of time of the future Kumo. For instance, when using a weekly chart, the Kumo is projected forward 6 months.

CHARTVIEW
Monthly2 Years 2 Months
Weekly6 Months
Daily4 Weeks

I mainly use weekly, daily, 4-hour, and 1-hours time frame charts. We’ll go over shorter time frames in Course 04 – Finding Trades – How to Find Stock Trades using Ichimoku Kinkō Hyō – Chasing Tornadoes.

 

Let’s take a look at some weekly charts along with the corresponding daily charts. The daily chart is on top with the weekly chart below. At the beginning of the daily chart, in late October, you can see a gap down. At the end of the weekly chart, it’s revealed that this gap down took the weekly from above the Cloud to under it.


Notice the first vertical green line on the weekly is challenging the bottom of the Cloud as the daily enters its Cloud. The daily then has a hard time breaking out of its Cloud and look at how the same thing is happening on the weekly. The daily finally breaks free of its Cloud but the weekly is still inside. The daily then trades sideways as the weekly can’t seem to break free of its Cloud. Then, in the last four days of trading the daily gaps back below its Cloud as does the weekly. In this situation, both the daily and weekly have Cloud resistance above.

Both Chikou Spans are finding support from the Cloud. If market action continues to deteriorate, both could find themselves below the top lines of their Clouds.


In this situation, we see the daily has fallen below its Cloud then on the last day of trading moved from below to above. In this Kumo breakout situation, the weekly is giving support. The weekly is well above its Cloud and the last pullback seems to find support at its red Kijun-sen.

If the next trading day or days the daily can stay above or close above its Cloud, the uptrend could continue. Notice the Tenkan-sen Kijun-sen channel on the weekly is almost a year long.


If we extend the flat line on the weekly Kijun-sen we can see this support area on the daily. This is an example of how you can use the weekly to find additional support on the daily. Notice the weekly consolidation range between October and the end of the year. This is what helped make the flat Kijun-sen and shows the support area.


The charts are not looking good for the bulls on Anheuser-Busch. The first vertical green bar shows the weekly trying to unsuccessfully enter its Cloud.

Both finally make it above their Clouds in late July with some gappy action. Then the daily falls below its Cloud with the weekly not far behind on a big gap down shown on the weekly as a large red candle that enters the Cloud. The weekly tries to get momentum at the second vertical line at a thin Cloud area. At the same time, the daily enters then hugs the bottom of its Cloud. Both now have bearish-free and clear Chikou Spans. 

Here we can see what looks like a great weekly chart. Above the Cloud, nice Tenkan-sen Kijun-sen channel, and a free and clear Chikou Span. However, the daily shows consolidation while being under the Cloud with three Kumo twists in the future Cloud. Three or more Kumo twists in the future Cloud is a signal to NOT trade if you were interested in entering this consumer services/discretionary/cyclical China ETF.

Here is another example of using the support/resistance that you see in weekly charts to help make decisions on daily charts. The flat line of the weekly red Cloud, the Senkou Span B line, has been extended using a line drawing tool. It shows up on the daily providing a support area for the current market action.

If you were in this as a trade and your trading rules had the stop below this line, then there is a chance the red line could serve as support for the trade. 

The charting platform used for this analysis is provided by Charles Schwab and is called TOS or ThinkorSwim.