Binary options Ichimoku Cloud Strategy

The Binary Options Ichimoku Cloud Strategy is a comprehensive approach that uses the Ichimoku Kinko Hyo indicator to gauge market momentum, identify trends, and discover potential support and resistance levels. This Japanese charting technique provides a holistic view of the market conditions at a glance. Here’s an in-depth look at how to apply this strategy, along with examples and tips:

Understanding the Ichimoku Cloud

The Ichimoku Cloud, or Ichimoku Kinko Hyo, consists of five main components:

  1. Tenkan-sen (Conversion Line): Calculated as the average of the highest high and the lowest low over the last 9 periods. It’s quicker to react than the Kijun-sen.
  2. Kijun-sen (Base Line): The average of the highest high and the lowest low over the last 26 periods. It acts as a confirmation of the trend.
  3. Senkou Span A (Leading Span A): The average of the Tenkan-sen and the Kijun-sen, plotted 26 periods ahead.
  4. Senkou Span B (Leading Span B): The average of the highest high and the lowest low over the past 52 periods, plotted 26 periods ahead. This and the Senkou Span A form the “cloud”.
  5. Chikou Span (Lagging Span): The closing price plotted 26 periods back.

How to Use the Ichimoku Cloud in Binary Options Trading

  • Trend Identification: A price above the cloud indicates an uptrend, while a price below the cloud suggests a downtrend. Trading within the cloud indicates a consolidation phase or trendless state.
  • Signals for Entry: A bullish signal occurs when the Tenkan-sen crosses above the Kijun-sen above the cloud. Conversely, a bearish signal is when the Tenkan-sen crosses below the Kijun-sen below the cloud.
  • Momentum and Strength: The distance between the Senkou Span A and B can indicate the trend’s strength. A wider cloud suggests a stronger trend.
  • Support and Resistance: The cloud acts as a dynamic support and resistance level. The front boundary of the cloud (facing the price action) offers immediate support/resistance, while the far boundary provides secondary support/resistance.


Consider an asset that has been trading below the cloud, indicating a downtrend. If the price moves above the cloud and the Tenkan-sen crosses above the Kijun-sen while above the cloud, it signals a strong upward trend emergence. This could be an opportune moment to enter a “call” binary option, anticipating further price increase.

Tips for the Ichimoku Cloud Strategy

  • Wait for Clear Signals: The strength of the Ichimoku Cloud strategy lies in its ability to filter noise. Wait for a clear crossover signal and price to move out of the cloud for stronger trade signals.
  • Use in Conjunction with Other Indicators: While the Ichimoku Cloud provides a comprehensive picture, combining it with other indicators like RSI or MACD can enhance your analysis.
  • Practice Patience: This strategy works best when giving clear signals. Avoid trading when the price is within the cloud, as this indicates a lack of trend.
  • Adjust Timeframes: Experiment with different timeframes to find which best suits your trading style, though the Ichimoku Cloud is traditionally used on daily charts.
  • Keep an Eye on the Chikou Span: This lagging component can provide additional confirmation of the trend. For instance, a Chikou Span rising above past price action reinforces a bullish signal.

The Ichimoku Cloud strategy offers binary options traders a dynamic and integrated approach to market analysis. Its comprehensive nature can help identify trade opportunities with higher probabilities by considering trend direction, momentum, and potential support/resistance levels.

How to trade with binary options with the Ichimoku Cloud

Trading binary options with the Ichimoku Cloud Strategy involves a systematic approach that allows traders to capitalize on trends, momentum, and support/resistance levels. Here’s a step-by-step guide on how to apply this strategy effectively:

Step 1: Setting Up the Ichimoku Cloud

  • First, configure the Ichimoku Cloud on your trading platform. The standard settings are 9 for Tenkan-sen, 26 for Kijun-sen, 52 for Senkou Span B, and the displacement of 26 for the cloud. These parameters can be adjusted based on your trading style and the asset’s volatility.

Step 2: Analyzing the Market Trend with the Cloud

  • Look for the Price Position Relative to the Cloud: A price above the cloud indicates an uptrend, suitable for “call” options. A price below the cloud suggests a downtrend, fitting for “put” options.
  • Cloud Color and Shape: A green cloud (Senkou Span A above Senkou Span B) signifies a potential uptrend, while a red cloud indicates a downtrend. The thickness of the cloud can signal the strength of the trend.

Step 3: Identifying Trade Signals with Tenkan-sen and Kijun-sen

  • Bullish Signal: A crossover of the Tenkan-sen above the Kijun-sen, especially above the cloud, is a strong buy (call option) signal.
  • Bearish Signal: A crossover of the Tenkan-sen below the Kijun-sen, particularly below the cloud, indicates a sell (put option) signal.

Step 4: Confirming the Trend with Chikou Span

  • Trend Confirmation: Confirm your trade signal with the Chikou Span. If it’s above the price action in an uptrend or below in a downtrend, it adds confirmation to your trade.

Step 5: Entry Points

  • Entering a Trade: Enter a trade when all the following conditions are met: the price is on the correct side of the cloud, the Tenkan-sen and Kijun-sen crossover aligns with your trade direction, and the Chikou Span confirms the trend’s strength and direction.

Step 6: Managing Risk and Setting Expiry

  • Risk Management: Only risk a small percentage of your account on any single trade.
  • Choosing Expiry Times: Your expiry time should correspond to the timeframe of the chart you are analyzing. For a 1-hour chart, for example, setting an expiry time of 2-3 hours or more can be appropriate to capture the full movement predicted by the indicator.

Step 7: Monitoring and Exiting

  • Monitor Your Trade: Keep an eye on how the price action evolves relative to the cloud and the moving averages.
  • Exiting Early: If the market conditions change dramatically, consider exiting early to protect your investment. For instance, if a significant contrary crossover occurs or the Chikou Span moves unfavorably, reassess your position.


Imagine you’re trading a currency pair on a 1-hour chart, and you notice the price has just moved above the Ichimoku Cloud, the Tenkan-sen has crossed above the Kijun-sen above the cloud, and the Chikou Span is above past price action. These signals suggest a strong uptrend. Given these conditions, you might enter a “call” binary option, setting an expiry time that gives the trade enough time to develop, based on the chart’s timeframe and the expected volatility of the asset.

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