Ichimoku Cloud — Trading Wiki

What Ichimoku Cloud means

A comprehensive Japanese indicator system showing support/resistance, trend direction, and momentum in a single view. The Cloud (Kumo) is the signature feature.

In depth

The Ichimoku Kinko Hyo — commonly called the Ichimoku Cloud — is a comprehensive technical analysis system developed by Japanese journalist Goichi Hosoda in the late 1930s (published in 1969 after 30 years of refinement). Unlike most Western indicators that measure only one dimension of price action, Ichimoku integrates five distinct calculations into a single chart overlay that simultaneously displays support/resistance levels, trend direction, momentum, and potential future support/resistance zones. The five components are: Tenkan-sen (Conversion Line) — the midpoint of the highest high and lowest low over the past 9 periods, serving as a fast signal line.

Kijun-sen (Base Line) — the midpoint over 26 periods, serving as a medium-term trend indicator and potential support/resistance. Senkou Span A (Leading Span A) — the average of Tenkan and Kijun lines, plotted 26 periods into the future. Senkou Span B (Leading Span B) — the midpoint of the highest high and lowest low over 52 periods, plotted 26 periods ahead. The shaded area between Senkou Span A and B forms the Cloud (Kumo) — the system's signature feature. Chikou Span (Lagging Span) — the current closing price plotted 26 periods in the past, used for confirmation.

Trading signals in Ichimoku follow a hierarchy. The strongest bullish signal combines: price above the Cloud, Tenkan-sen above Kijun-sen, Chikou Span above price from 26 periods ago, and the Cloud itself is green (Senkou Span A above B). When all five conditions align, the signal is considered the highest conviction 'three-line' signal.

Key points

• Five components that show trend, momentum, and support/resistance
• The Cloud (Kumo) provides dynamic, future-projected support/resistance
• Strongest signals align all five components in one direction

Practical tip

The Cloud's thickness represents the strength of support/resistance — thicker Cloud = stronger level. When price approaches a thin section of the Cloud, there is a higher probability of a breakout. The 'Kumo twist' (where the Cloud changes color) plotted 26 periods ahead is an early warning of potential trend changes.

Why it matters when you are learning

Ichimoku looks complex but provides the most complete single-indicator view of any market. Learning it gives you a framework that replaces 3-4 separate indicators.

Practising Ichimoku Cloud on the simulator

Recognising Ichimoku Cloud on a static example is easy; spotting it on the right-hand edge of a live chart, before the outcome is known, is the actual skill. Open the practice desk, scan a handful of instruments you already follow until you find a candidate, and mark the level that would prove the read wrong. Take a small simulated position, then come back a day later and compare what happened with what this page describes. Educational simulation only — not financial advice.