Ichimoku Cloud (Ichimoku Kinko Hyo) is a comprehensive technical indicator that shows support, resistance, trend direction, and momentum in one view. Developed by Japanese journalist Goichi Hosoda, it uses five calculated lines to give traders a complete picture. The “cloud” (Kumo) formed between two lines is the indicator’s most distinctive feature, showing potential support and resistance zones.
- All-in-one indicator: trend, support, resistance, momentum
- Five lines including the cloud (Kumo)
- Price above cloud = bullish; below = bearish
How Ichimoku Works
Ichimoku consists of five calculated lines:
Ichimoku Components:
1. Tenkan-sen (Conversion Line)
= (9-period High + 9-period Low) / 2
Fast signal line
2. Kijun-sen (Base Line)
= (26-period High + 26-period Low) / 2
Slower, more significant
3. Senkou Span A (Leading Span A)
= (Tenkan + Kijun) / 2, plotted 26 periods ahead
Cloud boundary 1
4. Senkou Span B (Leading Span B)
= (52-period High + 52-period Low) / 2, plotted 26 ahead
Cloud boundary 2
5. Chikou Span (Lagging Span)
= Close plotted 26 periods back
Confirmation line
Quick Reference: Ichimoku Signals
| Signal | Condition | Interpretation |
|---|---|---|
| Bullish trend | Price above cloud | Strong uptrend |
| Bearish trend | Price below cloud | Strong downtrend |
| Bullish TK cross | Tenkan crosses above Kijun | Buy signal |
| Bearish TK cross | Tenkan crosses below Kijun | Sell signal |
| Kumo breakout | Price exits cloud | Trend change |
Example: Trading Ichimoku
Kumo Breakout Long:
| Day | Price | Cloud | Signal |
|---|---|---|---|
| 1 | $95 | Below cloud | Bearish trend |
| 5 | $100 | Entering cloud | Transition zone |
| 8 | $105 | Exits above cloud | BUY signal |
| 8 | - | Tenkan > Kijun | TK confirms |
| 15 | $115 | Cloud is support | Trend continues |
Ichimoku Cloud is an all-in-one indicator showing trend, support, resistance, and momentum. Price above the cloud is bullish; below is bearish. The TK cross and Kumo breakout are key signals. The cloud acts as dynamic support and resistance.
Key Ichimoku Signals
Kumo Breakout
Price breaking above or below the cloud signals trend change. Stronger when cloud is thin.
TK Cross
Tenkan crossing Kijun. Bullish cross above cloud is strongest. Bearish cross below cloud is strongest.
Kumo Twist
When Senkou Span A crosses Senkou Span B, cloud changes color. Signals potential trend change ahead.
Chikou Confirmation
Lagging span above price confirms bullish trend. Below price confirms bearish.
Trading Strategies
Trend Following
Stay long when price is above cloud. Stay short when below. Exit when price enters cloud.
Kijun Bounce
In strong trends, price often bounces off Kijun-sen. Use as trailing stop or entry point.
Cloud as Support/Resistance
Thick cloud areas act as strong S/R. Thin cloud areas are easily penetrated.
Common Mistakes
-
Trading in the cloud – Inside the cloud is no-man’s land. Wait for clear breakout.
-
Ignoring cloud thickness – Thick cloud = strong S/R. Thin cloud = weak.
-
Wrong timeframe – Standard settings work best on daily. Adjust for intraday.
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Using alone – Ichimoku is comprehensive but confirm with volume or price action.
How JournalPlus Tracks Ichimoku
JournalPlus logs Ichimoku conditions (above/below cloud, TK cross) at entry, helping you analyze your success with this comprehensive indicator.
