Do Ichimoku Cloud Charts Work and Do They Work Better in Japan?
International Federation of Technical Analysts Journal, 2016 Edition, Forthcoming
7 Pages Posted: 9 Jul 2015 Last revised: 6 Nov 2015
Date Written: July 9, 2015
This article explores the profitability of signals generated using Ichimoku Cloud Charts on single stocks in Japan and the USA. We construct a conservative and aggressive long-only and short-only strategy over a period from 2005-2014 and examine the profitability of the various strategies. Based on the simulation, we evaluate the ability of Ichimoku Cloud charts to generate profitable trading signals in these 2 markets. In addition, we propose that the Cloud chart exhibits characteristics typical of a momentum and breakout strategy with returns that are positively skewed and with a small left tail due to the natural stop loss built into such a strategy.
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