Ichimoku Cloud (Ichimoku Kinko Hyo)
Comprehensive trading system that provides trend direction, momentum, support/resistance levels, and trading signals all in one powerful visual indicator
Technical Overview
Ichimoku Kinko Hyo, or “One Glance Equilibrium Chart,” is a comprehensive technical analysis system developed by Japanese journalist Goichi Hosoda. This all-in-one indicator combines trend identification, momentum analysis, and support/resistance levels in a single visual framework that shows past, present, and future market equilibrium.
Key Insight: Unlike single-purpose indicators, Ichimoku provides a complete market picture through five components working together. The famous “cloud” (Kumo) acts as dynamic support/resistance, while the system’s unique future projections help anticipate price action before it occurs.
How Ichimoku Cloud Works
What Ichimoku Actually Shows
Think of Ichimoku as a “complete market dashboard” that answers multiple questions: “What’s the trend? Where is support/resistance? What’s the momentum? Where might price go?”
Step 1: Calculate Lines
Create 5 lines using different high/low periods
Step 2: Form the Cloud
Project two leading spans to create future support/resistance
Step 3: Analyze Position
Interpret price relative to cloud and line relationships
Reading Ichimoku Signals
Price above cloud with ascending lines
Sideways movement, waiting for breakout
Price below cloud with descending lines
Key Ichimoku Components
Tenkan-sen (Conversion Line)
9-period midpoint line that acts as a fast-moving average, providing signals for short-term momentum and trend changes
Kijun-sen (Base Line)
26-period midpoint line serving as a slower trend indicator and key support/resistance level for price action
Kumo (Cloud)
Dynamic support/resistance zone formed by Senkou Spans A and B, projected 26 periods into the future
Chikou Span (Lagging Span)
Current price plotted 26 periods back, used to confirm trend strength and identify momentum divergences
Strategy Integration
5-Day Predictions
How Ichimoku Powers Multi-Timeframe Analysis:
- Trend Confirmation: Cloud position and thickness provide trend strength context for short-term trades
- Support/Resistance Levels: Cloud boundaries and Kijun-sen act as dynamic entry/exit levels
- Momentum Signals: Tenkan/Kijun crossovers generate timing signals for position entries
- Future Projections: Cloud evolution 26 periods ahead helps anticipate support/resistance zones
- Risk Management: Cloud breaks signal trend changes requiring position adjustments
Real Impact: Ichimoku provides complete market context, helping MCTM identify high-probability setups with clear risk levels
1-Year Predictions
How Ichimoku Enhances Long-Term Market Analysis:
- Regime Identification: Cloud characteristics help identify major bull/bear market phases
- Structural Levels: Long-term cloud projections reveal key future support/resistance zones
- Trend Persistence: Thick clouds and aligned components suggest sustained directional moves
- Equilibrium Analysis: Cloud positioning relative to price shows market balance vs imbalance
- Multi-Asset Correlation: Ichimoku patterns across asset classes reveal macro market themes
Real Impact: Ichimoku helps MFMM identify major trend changes and structural market shifts for strategic positioning
Ichimoku Signal Interpretation
Why Use Ichimoku Cloud in Trading?
- Complete trading system in one indicator
- Simultaneous trend, momentum, and support/resistance analysis
- Future projections for anticipating price action
- Works across all timeframes and asset classes
- Visual clarity for quick market assessment
- Multiple confirmation signals reduce false breakouts
Ready to Master Ichimoku Cloud?
Experience comprehensive market analysis in our educational trading app
Download App & Try IchimokuAll indicators and strategies are for learning and simulation. No financial advice provided. Market data refreshes on app reload. Past performance does not guarantee future results.