Ichimoku Cloud — Complete Trading System
Overview
The Ichimoku Cloud (Ichimoku Kinko Hyo) is a complete trading system in one indicator, identifying trend direction, support/resistance, momentum, and trade signals using five lines and a cloud. It is one of the most powerful entries in our indicator guide library, best applied on daily charts across forex and crypto markets. Incorporate Ichimoku signals into your broader trading strategies for multi-factor confirmation before entering a position.
How It Works
Ichimoku consists of Tenkan-sen (9-period midpoint), Kijun-sen (26-period midpoint), Senkou Span A (midpoint of Tenkan + Kijun, plotted 26 ahead), Senkou Span B (52-period midpoint, plotted 26 ahead), and Chikou Span (close plotted 26 periods back). The cloud (Kumo) is the area between Span A and Span B.
Key Signals
- Price above a green cloud = strong uptrend; below a red cloud = strong downtrend.
- Tenkan crossing above Kijun = bullish signal (TK cross).
- A thin cloud suggests weaker support/resistance; a thick cloud is harder to break.
- Chikou Span above price confirms bullish momentum.
Common Mistakes
- Changing the default settings (9, 26, 52) without understanding why they were chosen.
- Using Ichimoku on timeframes below 1 hour — it was designed for daily charts.
- Taking TK cross signals when price is inside the cloud (low probability).
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