Do Ichimoku Cloud Charts Work and Do They Work Better in Japan?

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.

Suggested Citation: Suggested Citation

Kai Jie Shawn, Lim and Yanyali, Selin and Savidge, Joseph, Do Ichimoku Cloud Charts Work and Do They Work Better in Japan? (July 9, 2015). International Federation of Technical Analysts Journal, 2016 Edition, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2628581