Ichimoku Cloud Trading

Ichimoku Kinko Hyo ("one glance equilibrium chart") is a comprehensive indicator system that shows support, resistance, trend direction, momentum, and trade signals all in one view.

The Five Lines

Tenkan-Sen (Conversion Line)

• 9-period midpoint (highest high + lowest low / 2)
• Fast-moving line
• Shows short-term trend
• Similar to a 9-period moving average

Kijun-Sen (Base Line)

• 26-period midpoint
• Slower line
• Shows medium-term trend
• Acts as support/resistance

Senkou Span A (Leading Span A)

• Average of Tenkan and Kijun, plotted 26 periods ahead
• Forms one boundary of the cloud
• Future support/resistance reference

Senkou Span B (Leading Span B)

• 52-period midpoint, plotted 26 periods ahead
• Forms other boundary of the cloud
• Strongest support/resistance

Chikou Span (Lagging Span)

• Current close plotted 26 periods back
• Confirms trend when compared to past price
• Above past price = bullish

The Cloud (Kumo)


The shaded area between Senkou Span A and B:

• Green cloud (Span A above Span B): Bullish
• Red cloud (Span B above Span A): Bearish
• Cloud thickness: Indicates support/resistance strength
• Cloud twist: Potential trend change

Trading Signals

Strong Buy Signal

• Price above the cloud
• Tenkan crosses above Kijun
• Chikou Span above past price
• Cloud is green and expanding
• All five confirmations aligned

Strong Sell Signal

• Price below the cloud
• Tenkan crosses below Kijun
• Chikou Span below past price
• Cloud is red and expanding

TK Cross

• Tenkan crosses above Kijun = bullish
• Tenkan crosses below Kijun = bearish
• Strongest when above/below cloud respectively

Kumo Breakout

• Price breaking above cloud = bullish
• Price breaking below cloud = bearish
• Thick cloud = harder to break through
• Thin cloud = easier breakout

Ichimoku Trading Strategy

Entry Rules

1. Confirm trend direction with cloud color
2. Wait for TK cross in trend direction
3. Price must be on correct side of cloud
4. Chikou Span must confirm
5. Enter on pullback to Kijun-Sen

Stop Loss

• Place below Kijun-Sen for buy trades
• Below the cloud for trend trades
• Below recent swing low

Take Profit

• Next cloud boundary
• Key swing high/low
• When opposing TK cross appears

Practical Tips

1. Works best on daily and 4H charts
2. Avoid when price is inside the cloud (choppy)
3. Cloud thickness indicates conviction level
4. Multiple timeframe analysis enhances signals
5. Combine with candlestick patterns for timing