Module #2 Intermediate Strategy

Welcome to The Intermediate section of the Noble Impulse Strategy - Moving Average

NOTE: If you’re using the V3. We suggest applying this strategy with the buy and sell signals first for better understanding. You can utilize the other features later on.

In this section, we will show you how we filter false signals, where to place stop loss, and a few market examples. We put together a game plan, covering everything that correlates to the Noble Impulse indicator. Support and Resistance levels, as well as entry and exit targets.

We will be using the Ichimoku Cloud moving average along with Noble Impulse Indicator to provide a further understanding of the overall market conditions. However, in the next section on the Advanced strategy. We will be using the entire Ichimoku Cloud system.

What is Ichimoku Cloud or Ichimoku Kinko Hyo?

Ichimoku Cloud is developed by Goichi Hosoda. It represents a trend-following trading system with a variety of indicators that are similar to moving averages. The Ichimoku cloud is one of the few indicators out there that can predict price movement. The advantage of this indicator is the fact that it offers a unique perspective of support and resistance, representing these levels based on price action.

How to Properly Set up your chart with Ichimoku Cloud Moving Average

Simply click the Indicator and Strategies and then search for Ichimoku Cloud. Make sure to use the built-in version of Ichimoku Cloud.

For mobile, click the plus button and then indicators. Search for Ichimoku Cloud. Make sure to use the built-in version of Ichimoku Cloud.

 Once you have added the Ichimoku Cloud to your chart. Click the settings. For the Inputs, leave it as default. Under style, uncheck everything except the Conversion Line and Baseline. This is what we will be using for this strategy. A similar process for mobile.

You can edit the thickness and color of the moving averages to your preference.

Recommendation

We recommend that you go through this strategy section with the Noble Impulse and Ichimoku Cloud Moving Average chart in front of you. So you can follow along and get familiarized with this strategy on your chart.

Moving Average

On this strategy, we will be using two Ichimoku Cloud moving averages. One is the Tenkan-sen, but we will be calling this the Conversion line. Two is the Kijun-sen or also known as the Baseline.

Tenkan-sen/Conversion line - Plotted as the highest high + lowest low/2, averaged over the last nine periods.

The Conversion Line is also known as the turning line. Conversion Line signals an area of minor support or resistance. It also moves much faster than the baseline and reacts to trend changes much quicker. Its slope shows the market trends, and when it moves sideways, it indicates a ranging market.

Formula: (9 period high + 9 period low)/2

Kijun-sen/Baseline - Plotted as the highest high + lowest low/2, averaged over the last 26 periods.

The Baseline moves much slower than the conversion line. The Baseline is also known as the confirmation level and serves as a signal for support and resistance. A lot of traders use the Baseline as a trailing stop level. This is what we will use as a stop loss.

Note: The newest update has a built-in stop loss. You can choose to set up your own stop loss based on that by adjusting the risk to reward ratio.

Formula: (26 period high + 26 period low)/2

How to Read Ichimoku Moving Average Indicators

For many traders, the Ichimoku cloud system might seem complicated and hard to understand, but once you get familiar with how to interpret the charts you will find a lot of great trading signals.

Since the Conversion line only measures 9 candles, it is considered a short-term price movement. If the market price is above the Conversion Line, this suggests a short-term upward momentum. If the market price is below the Conversion Line, this suggests a short-term downward momentum.

The Baseline represents medium-term price movement since it measures more candles than the Conversion line. If the market price is above the Baseline, this suggests a medium-term upward momentum. If the market price is below the Baseline, this suggests a medium-term downward momentum.

For the strong price movement, we will look at the entire Ichimoku Cloud System

How to Identify Ichimoku Moving Average Trading Signals - Crossover Strategy

One of the most popular strategies among Ichimoku Cloud users is the Crossover Trading Strategy. The crossover between the Conversion line and Baseline can offer trading opportunities similar to the moving averages. You’re probably asking why not use normal SMA or EMA. That is because the Ichimoku Cloud moving average offers support and resistance, as well as stop-loss levels, unlike the normal moving averages.

When the fast-moving Conversion line crosses above the slower moving Baseline, we have a buy signal. (When the Blue line crosses above the Red line, we have a buy signal).

When the fast-moving Conversion line crosses below the slower moving Baseline, we have a sell signal. (When the Blue line crosses below the Red line, we have a sell signal).

When the Moving Average is relatively close and clasping each other it is considered a ranging market.

For the example below, we will be using the Heiken Ashi. Note: Ichimoku Cloud reacts differently between the regular candlesticks and the Heiken Ashi candlesticks.

Ranging Market

Upward/Bullish Momentum

Downward/Bearish Momentum

Strong Bullish Momentum - When the price is trending above the Conversion Line and above the Baseline, meaning that the moving average cross over already occurs. It is considered a strong bullish momentum.

Weak Bullish Momentum - When the price is trending above the Conversion Line but still below the Baseline. It is considered a weak bullish momentum.

Strong Bearish Momentum - When the price is trending below the Conversion Line and below the Baseline, meaning that the moving average crossover already occurs. It is considered a strong bearish momentum.

Weak Bearish Momentum - When the price is trending below the Conversion Line but still above the Baseline. It is considered a weak bearish momentum.

Using Moving Average to Filter Signals

Now, we will be using the Noble Impulse along with Ichimoku Cloud moving average to filter false signals. For the example below, we will be using the Heiken Ashi. Note: Ichimoku Cloud reacts differently between the regular candlesticks and the Heiken Ashi candlesticks. Although, the visualization is relatively similar and the same rules apply.

Most of these false signals are market pullbacks and corrections.

Scroll down to see the example below.

Filtering the signals on a Bullish trend - When the price/candlestick is trending above the Moving Average. We will only take the Buy signals given by the Noble Impulse indicator and we will consider all Sell signals as false signals.

Filtering the signals on a Bearish trend - When the price/candlestick is trending below the Moving Average. We will only take the Sell signals given by the Noble Impulse indicator and we will consider all the Buy signals as false signals.

Where To Place Your Stop Loss

When entering a trade, you should understand and know your risk first before worrying about your potential reward. There is no strategy in the world that can offer a 100% winning ratio. That’s why we have to place a stop loss so we can minimize our losses when the market decides to go the other way. there are multiple ways where we can place a stop-loss on this strategy.

- Second, count 10-20 Pips below or above the buy/sell signal(medium-high risk) Of course this depends on what timeframe you’re trading on.

We recommend using the Baseline for stop loss. Red dotted line shows the stop loss level. This strategy is low risk. However, since the stop loss level is quite close to the entry. You may get stopped out too early, we suggest moving your stop loss according to your risk tolerance.

Note: The newest update has a built-in stop loss. You can choose to set up your own stop loss based on that by adjusting the risk to reward ratio.

When Should You Enter a Trade?

Whether going for a long or short position. Noble Impulse can give you a signal when it's time to BUY or SELL. We should consider not taking any position when the market is ranging. Another way to tell when the market is ranging is when the moving averages are pointing sideways. When you get a signal above or below the moving average while pointing upwards or downwards you may open a position.

When Should You Consider Closing a Position?

We cannot always close the trade at the very top or at the very bottom. Therefore, we have to find rational reasoning upon closing a position. There are several ways to close a trade on this strategy.

First, when it seems like the Moving Averages are starting to point sideways and clasping each other indicating that the market is consolidating and can possibly go both ways.

Second, when the opposing signal shows up. This depends on the current condition.

Finally, when the opposite Moving Average crossover takes place. Meaning that the market is about to head in the opposite direction.

Trailing Stop for Winning Trades

A trailing stop is designed to keep your profits or limit losses as your trade moves in your favor. If you feel comfortable locking your profits at a certain pips/price or you’re looking to ride the trend without a risk. You can move your stop loss at your entry price or small profits for a risk free trade.

Market Example

On this chart, we can see a strong upward momentum. Any short/sell signal on this picture will be considered as a false signal. The first Buy signal is right after when the Moving Average crossover happens. However, we are stopped by the short signal for a retest.

The second Buy signal indicates a strong upward movement. Since the price is above the Conversion Line and the Baseline. At the same time, the Moving Average crossover already took place. Like we mentioned above, Moving Average crossover signals an entry point for Ichimoku Cloud strategy. So, as soon as the crossover happens and you get a buy signal above the Moving Average you may take the trade depending on the condition.

On these trades, we can see that the Conversion line is acting as a support as it holds the price really well. In this case, you can ride the trend and start trailing your stop-loss on the Baseline or simply move your stop-loss at your entry price for a risk free trade.

Red dotted line shows the stop loss level. This strategy is low risk. However, since the stop loss level is quite close to the entry. You may get stopped out too early, we suggest moving your stop loss according to your risk tolerance.

Key Take-Aways

The Noble Impulse indicator alone is an effective tool. It can help you find buy and sell opportunities in any market. Adding additional indicators will significantly increase your chance of success.

Also, when you add price action and key levels on higher timeframes. This strategy will become much more effective.

Upward Momentum:

- When the price is trending above the Conversion Line but still below the Baseline, and Noble Impulse signals an upward arrow. It is considered a weak buy signal. Therefore you should only consider opening a portion of your normal lot size/position.
- When the price is trending above the Conversion Line and above the Baseline, meaning that the moving average cross over already occurs and Noble Impulse signals an upward arrow. It is considered a strong buy signal.

Downward Momentum

- When the price is trending below the Conversion Line but still above the Baseline, and Noble Impulse signals a downward arrow. It is considered a weak sell signal. Therefore you should only consider opening a portion of your normal lot size/position.
- When the price is trending below the Conversion Line and below the Baseline, meaning that the moving average cross over already occurs and Noble Impulse signals a downward arrow. It is considered a strong sell signal.

Ranging Market

- Be extra careful when trading the ranging market, because the market can possibly breakout in either direction.
- When the Moving Average is relatively close and clasping each other it is considered a ranging market.

TIP: Imagine there is an arrow at the end of the Conversion line/Blue line. It will help you find better entry and exit targets. If it’s pointing up, it indicates a bullish trend. If it’s pointing down, it indicates a bearish trend. If it’s pointing sideways, it indicates a ranging market.

CONGRATULATIONS!

You have finished the Intermediate section of the Noble Impulse Strategy. We really hope that this strategy can guide you in the right direction. In the advanced section, we will explain how to use the entire Ichimoku Cloud system with the Noble Impulse indicator.

The strategy that we provide is just a guide. The past performance doesn’t guarantee the future results.

If you need any assistance or have any questions, please reach out to us via email on our website under the contact us section or the email down below. Noble Impulse offers 24/7 support. But due to high traffic, it may take a few hours for our support team to respond. We will do our best to get back to you in a timely manner.

support@nobleimpulse.com or nobleimpulsebot@gmail.com

Copyright © 2022 Noble Impulse Team. All rights reserved.