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Trading the cloud the chikou span (part two)

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Part two of my Chikou span guide. In this guide I show traders how we can use the Chikou span to plot strong support and resistance lines.

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Trading the cloud the chikou span (part two)

1. 1. Trading the Cloud - The Chikou Span (Part two)In this chapter I want to talk about how the Chikou span can be used as a pureSupport and Resistance indicator. I have decided to dedicate a whole post tothis, so lets get started. The Chikou Span can provide clearlevels of Support and Resistance One  of the main things that is often overlooked or not really talked about is the factthat the Chikou span can be used to reference some very powerful support andresistance lines. To begin to understand, look at this chart
2. 2. Looking at the chart above, you can see that the chikou span can provide supportand resistance lines for future moves. Because the chikou span represents priorclosing prices, it is perfect for mapping past areas of support/resistance.We can find these Support and Resistance lines by drawing a horizontal line acrossthe points created by the Chikou span, this helps us to see these key levels andutilise on our analysis and trading decisions.In the chart above I have taken an example of support and resistance by drawing aline across 3 points of the chikou span. I will break this down to explain it better. As you can see in the first instance, price at first respected the support, but then 11candles later broke through, turning the support into a resistance.Once a support line is broken it becomes resistance, and visa versa. Now lets look at the second point of resistance
3. 3.  You can now see price again respected the resistance and struggled to breakthrough. until 6 candles later where it seems to have broken upwards but soondropped back below. So we are at the point on the chart where price is undecided on direction.Will it respect the resistance and move down?, or will it respect the support andmove up?