have a bullish entry signal, so if prices end up falling below the 60-minute Kijun, I will

abandon the trade. My stop-loss is thus close by and placed just below the Kijun. I
widen it in higher time frames when the trade is in the correct direction.
It goes without saying that it is better to place a technical stop and to adjust the size of
the position in accordance with the principles of money management than to base it on a
financial amount of loss and to have a stop that is inconsistent with the market.
My stops are always based on the technical but are adjusted depending on the time
frame used for entering positions as well as the market’s progression.
So, as I have already stated, my stop is tight at the beginning of the trade, becomes
larger during the intermediate progression of the market and is again tight once the final
target is within close reach. Many traders trail their stops to their entry price. In my
opinion, this is a mistake. Certainly, no losses occur if the stop is hit; but no profit is
realised either as the trade is exited. If the stop remains at a consistent technical level
corresponding with the invalidation of an expected market move, it will not be hit if
prices end up going in the anticipated direction. A stop that is not based on technical
is doomed to failure. As a result, I always trail stops as soon as new technical levels
arise.
With Ichimoku, I rely on:

The Kijun, especially at the start of the trade because the position is initiated
when prices break it. A break in the other direction will invalidate the signal
first given.
An SSB that is overcome in the middle of a move by the market. Since this line
is robust, traders should trade it in the same manner as with the Kijun.
Finally, the Tenkan – in particular at the end of the trade – as it gives an alert on
the end of the movement. When prices are close to the final target and break the
Tenkan, this indicates that the market’s move is over and that it is wise to close
the trade.

Thus, my stops are rarely hit and only in the case of an invalidation by the market.
Another example of how to place a stop-loss is presented on page 122 with a trade on
AUDUSD.

Example 2: with the other currency pair selected on lower time

frames: AUDJPY
I start with the same approach to analysing this currency pair by looking at the weekly
chart (chart 4.17): the trend is bearish ever since prices fell below the Kijun. The

www.rasabourse.com
Lagging Span validates this by equally breaking below its Kijun. It is interesting to note
that prices have found support at the 61.8% Fibonacci level, which is in agreement with
the cloud’s SSB.
Chart 4.17: AUDJPY, weekly chart

Two scenarios are to be considered:

prices keep falling towards the 76.4%/78.6% Fibonacci level, or

a double bottom is in progress, which would mean that a break above 90 yen
would trigger a buy signal with a target at 96 yen (Kijun level).

On the daily chart (chart 4.18), strong resistance is provided by the Kijun that is in line
with the flattened SSB to the right. A break above this level would be considered a
strong buy signal. On the other hand, if this resistance continues to hold, prices will
likely consolidate laterally in the direction of the flattened cloud. The pair could end in
a range-bound between the resistance and the double bottom level for several days.
However, prices will probably fall further if they do not rise immediately above the
Tenkan. There is therefore no alert as to the end of the bearish trend that is well in
place.
Finally, the trend line drawn on the chart is a possible obstacle to any rally in the
market.
Chart 4.18: AUDJPY, daily chart

www.rasabourse.com
Upon looking at these two charts, I realise that the direction in which one should trade is
not clear. For a trend-follower, it would be wiser to wait for prices to exit the weekly
cloud downwards, to be confirmed by the Tenkan and trend line resistance on the daily
time frame.
Otherwise, a short-term position could be initiated to take some profits from this break
in the bearish trend.
Indeed, on the 240-minute chart, chart 4.19, it is possible to enter long on the short
term between the perfectly-defined levels, provided that prices break above the Kijun.
Chart 4.19: AUDJPY, 240-minute chart

I proceed by planning my strategies via a 60-minute chart (chart 4.20).

Chart 4.20: AUDJPY, 60-minute chart

www.rasabourse.com
Prices attempt to break above the double resistance after having held above the cloud
twist, which would have led to a strong fall in the market. Given this, I would rather
look for an opportunity to buy the pair with the following strategy:

Initiate the trade above 87.879 yen.

Stop-loss at 87.53 yen.
Targets at 88.244, 88.420 and 88.785 as indicated on the 240-minute chart.

At the same time, I notice that prices are now above a double support. The direction of
the trade taken on this currency pair will depend on whether the market closes below or
above this support.
I go ahead and plan an alternative strategy with a bearish bias this time:

Enter the market below the double resistance at 87.71 yen.

Stop-loss at 87.879 yen.
Targets: the first is positioned at the point at which the Lagging Span meets its
Kijun (87.38 yen), which is also the SSB at the cloud twist. The second target is
found at the cloud’s SSB level, or 87.227 yen.

Next, as for managing the position, a new analysis will need to be done for each level
that is reached in order to determine whether or not the trade should be closed or if the
position should be added to.

www.rasabourse.com
To do this, I examine the way in which prices reach each support/resistance: in which
time frame; the candlestick’s size; economic releases; and how the market reacts at the
technical level. In this type of market study, shuffling between different time frames is
essential. Personal intuition and knowledge of the asset is also a factor.
Finally, I fine-tune the entry with the help of a 15-minute chart (chart 4.21).
Chart 4.21: AUDJPY, 15-minute chart

Prices are stuck between the Kijun and the SSB; the Lagging Span is advancing within
the cloud. The currency pair is obviously in an area of uncertainty without any clear
direction. I choose to wait for a signal, which is given seven candlesticks later.
Chart 4.22: AUDJPY, 15-minute chart

www.rasabourse.com
Take note of the precision with which prices stop falling on each support identified on
the hourly chart. This chart is updated in chart 4.23.
Chart 4.23: AUDJPY, 60-minute chart

After testing the second target, prices quickly rise back above the first, leading the
Lagging Span to bounce off its Kijun thus negating for a while the fall.
The trade was closed via a limit order because the fact that the market tested the first
support for such a long time on the 15-minute chart was a reason to be more cautious in
expecting further declines in prices. One could only hope for a brief acceleration

www.rasabourse.com
downwards, which did indeed occur. This is why it is a good idea to place such limit
orders in order to promptly close out trades.
The currency pair should now move higher towards the Kijun/Tenkan double resistance.
This rebound in prices should not be traded as it would imply a risk/reward ratio less
than one and above all because it would be against the trend.
The following conclusion can be made on this trade: if prices are trading in an area of
uncertainty like in the charts just shown, traders can either stay out of the market or they
can establish strategies in both directions (bullish and bearish) and rely on small time
frames in order to determine as soon as possible which trade will be executed.

Very short-term trading

This kind of trading is really hard to explain in a book because it is necessary to take a
lot of screenshots of three or four different time frames all at the same time in order to
explain a train of thought that has to be as fast as possible.
So, I will try to show you the basic principles of short-term trading through several
examples.
Whether one opts for an intraday trading strategy or a swing position, the analysis and
decision-making process remains the same. The main difference lies in the need to
shuffle between several charts throughout the entirety of the trade. Five-minute
candlesticks require much more attention than hourly ones.
Some traders call this type of trading scalping. I prefer to call it very short-term (VST)
trading because I aim for more than just two or three points per trade. In the currency
markets, I do not trade unless I expect to be able to make at least 15 to 20 points of
profit. As it is crucial to verify a technical break’s validity in VST trading lest ending
up stopped out of the market with a loss, traders must wait much longer before entering
the market. This means that I forego several points of potential profit before initiating
such a trade.
Ichimoku is extremely efficient when it comes to trading on shorter time frames, but the
rules to be followed are much stricter. Any hastiness or exemption often results in a
quick loss. This indicator’s simplicity and precision are major advantages when
entering the market or making quick decisions. Each line’s value should also be taken
immediately into account during the analysis process.
Here are three examples that illustrate VST trading strategies. The first is with 15-
minute, 5-minute and 1-minute charts. The second, which does not succeed, uses the 15-
minute and 5-minute time frames. The last example is of an economic release in the
United Kingdom.

www.rasabourse.com
Example 1: GBPUSD
Quite often, VST trades arise from opportunities to enter the market when prices are
retracing within a larger trend that in this case is ignored. Range-bound markets in
which prices fluctuate between different technical levels are also good examples of
VST trade opportunities. In such setups, one only seeks to make a few points of profit
with a larger position size to compensate for the limited variation in prices traded.
Chart 4.24: GBPUSD, 240- and 60-minute charts

In the 240-minute chart (left), prices are trading within the cloud, signalling market
equilibrium and uncertainty regarding the future trend. The Lagging Span has not
validated the fall in prices as it remains currently above its Kijun.
The 60-minute chart (right) confirms the lack of direction in the market. That said, the
last candlestick attempted to rise above the Tenkan. This may foreshadow a possible
test of the Kijun further up. I can therefore look to enter the market upon a break of the
Tenkan with a stop just below it and a target established at the Kijun. I would not aim
any higher because the thick cloud is likely to block prices.
I go ahead and fine-tune my entry by using the 15- and 5-minute charts.
Chart 4.25: GBPUSD, 15- and 5-minute charts

A buy signal is given in the 15-minute chart (left) with the candlestick that has pierced
through the cloud, broken the Kijun and closed at the same level as this line. Following
this, prices have attempted to rise completely above the cloud but have fallen back
within it, closing at practically the same level as the previous candlestick’s closing

www.rasabourse.com
price. Twice, the Lagging Span has failed to break its Kijun: the buy signal has not yet
been fully validated.
In the 5-minute chart (right), the signal can be seen with the Kijun break and prices that
have stopped rising at the SSB level. The Lagging Span is currently above this level.
The bearish engulfing pattern in the 5-minute chart suggests that prices may continue
falling towards the Tenkan and the Kijun. This would correspond with prices pulling
back to test the Kijun in the 15-minute chart.
In order to verify that this expected decline is really possible, I can take a quick look at
the 1-minute chart: the Kijun currently provides support to prices.
Chart 4.26: GBPUSD, 1-minute chart

Accordingly, this level needs to give in to selling pressure in order to see a further fall
in prices.
Chart 4.27: GBPUSD, 1-minute chart

www.rasabourse.com
Prices close on the Kijun then break it, opening the way to a test of the supports in the
15- and 5-minute charts (below).
Chart 4.28: GBPUSD, 15- and 5-minute charts

Chart 4.29: GBPUSD, 15- and 5-minute charts

Then they rebound. I get ready to take position as soon as prices rise above 1.55749 in
the 15-minute chart, corresponding with the SSB in the 5-minute time frame.

www.rasabourse.com
Chart 4.30: GBPUSD, 15- and 5-minute charts

Unfortunately, the market continues to fall. I end up doing nothing and wait to see what
happens next.
Chart 4.31: GBPUSD, 15- and 5-minute charts

In both the 5- and 15-minute charts, prices break below their respective clouds. The 5-
minute Lagging Span also breaks its Kijun.
At this point, I now have a sell signal validated by the Lagging Span in both time
frames. The buy strategy can therefore be abandoned. But I decide to wait for the current
candlesticks to close to fully invalidate the bullish scenario and look to short the
currency pair.
Chart 4.32: GBPUSD, 15- and 5-minute charts

In what follows, the candlesticks start to rebound. I am still waiting to see how they
close.
Chart 4.33: GBPUSD, 15- and 5-minute charts

www.rasabourse.com
In both time frames, the candlesticks end up closing above their respective Kijuns,
thereby invalidating the sell signal during this period. This demonstrates a critical point
when trading with Ichimoku: always wait for the current candlestick to close.
Chart 4.34: GBPUSD, 1-minute chart

As prices seem to have stopped falling in the middle of nowhere in the 15- and 5-minute
charts, when I look at the 1-minute chart I see that the Lagging Span marked the end to
this decline by rebounding off its Kijun. This illustrates a second important rule: always
keep these three time frames in front of you throughout the trade.
Chart 4.35: GBPUSD, 15- and 5-minute charts

www.rasabourse.com
Now prices start to rise again. I get ready to enter the market at the same level as
before. As this currency pair is volatile, I do not enter in anticipation even though the
latest signals are in the direction of my initial trade. Thus the third rule: do not
anticipate future price movements just to book a few more points (2–3 pips) of
profit at the risk of winding up on the wrong side of the market. In this case here, on top
of this currency pair’s natural volatility, one must not forget that prices have just
attempted to break lower. Nothing is keeping them from doing this again.
Chart 4.36: GBPUSD, 15- and 5-minute charts

What happens next in the above charts is an example of this: prices do not succeed in
rallying to the expected buy level. A further rise in prices is not guaranteed.
Chart 4.37: GBPUSD, 15- and 5-minute charts

The market starts rallying again, and I initiate a buy position just above the level
previously identified (the 15-minute Kijun and the 5-minute SSB).
Chart 4.38: GBPUSD, 15- and 5-minute charts

www.rasabourse.com
The order is executed and I am now in a long position. I still have the same price target
– the 15-minute SSB which is also the Kijun in the 60-minute chart – and the stop-loss
is placed below the 15-minute Kijun used for the entry.
Chart 4.39: GBPUSD, 1-minute chart

A quick look at the 1-minute chart shows that the move is weakening, but the Lagging
Span to the left has a nearby support with its Tenkan.
Chart 4.40: GBPUSD, 1-minute chart

This support holds, and prices do not end up falling back to my entry level. The rally
should continue now as this is so far only a pause in the market.
The brief correction seen in the 5-minute chart (chart 4.41) is reassuring because the

www.rasabourse.com
Lagging Span is still above the cloud and prices well beyond the Tenkan, which has an
upward slope.
Chart 4.41: GBPUSD, 5-minute chart

Coming back to the 15- and 5-minute charts, the rally is engaged. Now I start getting
ready for the moment to close out the position.
Chart 4.42: GBPUSD, 15- and 5-minute charts

The move higher accelerates, bringing prices practically to my target. I exit the trade as
I prefer to forego a few points rather than see the market fall back to my entry price,
which could happen just as fast as the rally did.
Chart 4.43: GBPUSD, 15- and 5-minute charts

www.rasabourse.com
What follows next shows me that I was right to close my trade.
Chart 4.44: GBPUSD, 15- and 5-minute charts

Chart 4.45 shows the end of the movement in the 240- and 60-minute charts. In the 240-
minute time frame (left), prices rose to test the Tenkan on top of a bearish trend line.
Likewise, in the 60-minute chart (right), prices test the Kijun again but the cloud
resistance is much too thick. Prices will start to fall again.
Chart 4.45: GBPUSD, 240- and 60-minute charts

Chart 4.46: GBPUSD, 240- and 60-minute charts

www.rasabourse.com
This trade presented an opportunity to make 35 points of profit with one single 15-
minute candlestick, but with an hour’s worth of waiting prior to taking position. VST
trading requires sharp analysis and the patience to wait for all necessary confirmation
before entering the market. Ichimoku is a particularly efficient tool in this type of trading
provided that all rules stated in this example are followed. This can certainly make
traders wait for a while, but the results will eventually be there.

Example 2: NZDUSD (New Zealand dollar/US dollar)

Chart 4.47: NZDUSD, 240-minute chart

Looking at this 240-minute chart (chart 4.47), prices have not yet reached the Kijun but
seem to want to start rising again. The overall trend being bullish, it is possible to
expect the currency pair to rise back to the Tenkan and even rally further above it,
thereby invalidating the bearish alert.
Chart 4.48: NZDUSD, 60-minute chart

www.rasabourse.com
In the 60-minute chart (chart 4.48), prices are rebounding off the cloud SSB, but the
Lagging Span has crossed its Kijun, validating the fall in prices. The Tenkan is plunging
towards the cloud (SSA) bringing down the level of resistance. A corrective move with
three candlesticks is in progress with the upside of the cloud as target. This double
resistance should push prices lower. A downward move would therefore be initiated
upon a break below the SSB currently below prices. The currency pair would in this
case fall as far as the 240-minute Kijun.
Chart 4.49: NZDUSD, 60-minute chart

Prices continue rising towards resistance (chart 4.49).

www.rasabourse.com
Chart 4.50: NZDUSD, 15-minute chart

In the 15-minute chart (chart 4.50), prices have broken above the Tenkan and have
pulled back on this level as a classic test of a breakout. They should test the Kijun,
which is at the same level as the Tenkan in the 60-minute chart. This is the target of this
position.
Chart 4.51: NZDUSD, 5-minute chart

The next 5-minute chart (chart 4.51) details the last movement seen in the 15-minute
time frame. I may expect prices to rebound here as they are testing three supports: the

www.rasabourse.com
Tenkan and the Kijun, both close by, and the cloud SSA. Take note of the trend line
reinforcing the cloud’s lower edge as well as the Lagging Span, which should find
support on the top of past candlesticks in line with the Tenkan. It may well break above
the Kijun again to validate bullish price action.
The bullish scenario mentioned in the 240-minute time frame is therefore worth
considering at this moment.
Chart 4.52: NZDUSD, 15-minute chart

15 minutes (chart 4.52): the Tenkan acts as support.

Notice that the Lagging Span is of no interest whatsoever in this time frame as it is far
from prices. We can therefore ignore it for the time being.
Chart 4.53: NZDUSD, 5-minute chart

www.rasabourse.com