Ichimoku Cloud: A Trader's Guide to Predicting Trends

What is Ichimoku Cloud?

Ichimoku Kinko Hyo ("one glance equilibrium chart") is a comprehensive indicator system developed by Japanese journalist Goichi Hosoda. It provides information about support, resistance, trend direction, and momentum—all in one view.

The Five Components

Tenkan-Sen (Conversion Line)

• •(9-period high + 9-period low) / 2
• •Fast-moving line for short-term trend

Kijun-Sen (Base Line)

• •(26-period high + 26-period low) / 2
• •Slower line for medium-term trend

Senkou Span A (Leading Span A)

• •(Tenkan + Kijun) / 2, plotted 26 periods ahead
• •Forms one edge of the cloud

Senkou Span B (Leading Span B)

• •(52-period high + 52-period low) / 2, plotted 26 periods ahead
• •Forms the other edge of the cloud

Chikou Span (Lagging Span)

• •Current close plotted 26 periods back
• •Confirms trend direction

Reading the Cloud

Bullish Signals

• •Price above the cloud
• •Cloud is green (Span A above Span B)
• •Tenkan above Kijun
• •Chikou above price 26 periods ago

Bearish Signals

• •Price below the cloud
• •Cloud is red (Span B above Span A)
• •Tenkan below Kijun
• •Chikou below price 26 periods ago

Trading Strategies

TK Cross

• •Tenkan crosses above Kijun above cloud = Strong buy
• •Tenkan crosses below Kijun below cloud = Strong sell

Cloud Breakout

• •Price breaks above cloud = Bullish trend change
• •Price breaks below cloud = Bearish trend change
• •Thicker cloud = Stronger support/resistance

Best Timeframes

• •Works best on daily and weekly charts
• •Can be used on shorter timeframes with adjusted settings
• •More reliable on higher timeframes

Conclusion

Ichimoku is a powerful all-in-one system. While it looks intimidating at first, once you understand the components, it provides a complete picture of market structure at a glance.