The Ichimoku Kinko Hyo (Ichimoku Cloud) is a comprehensive indicator system that defines support and resistance, identifies trend direction, gauges momentum, and generates trading signals — all in a single glance. Developed by Goichi Hosoda, the system consists of five lines and a shaded cloud (Kumo) that projects into the future, providing a uniquely forward-looking view of market equilibrium.
Tenkan-sen (Conversion Line): 9-period midpoint — short-term momentum. Kijun-sen (Base Line): 26-period midpoint — medium-term trend. Senkou Span A & B: form the Kumo (cloud) projected 26 periods ahead. Chikou Span (Lagging Span): current close plotted 26 periods back. Cloud thickness indicates support/resistance strength. Cloud colour indicates trend direction.
Enter long when price crosses above the Kumo cloud with both spans supporting bullish structure. Buy on a Tenkan-Kijun cross (TK cross) above the cloud for a strong bullish signal. Look for Chikou Span to be above price and above the cloud for full bullish confirmation. Enter on a Kumo twist (Senkou A crosses above Senkou B) with price above the cloud.
Exit longs when price closes below the Kijun-sen on a sustained basis. Close positions when a bearish TK cross occurs below the cloud. Take profits if the Kumo cloud ahead flattens or thins, suggesting reduced momentum. Exit when the Chikou Span crosses below price from above.
1H, 4H, Daily, Weekly
The strongest Ichimoku signals occur when all five elements align in one direction — this is rare but extremely reliable. Many traders only use price relative to the cloud and the TK cross; mastering the Chikou Span and Kumo twist adds a significant edge. Ichimoku was designed for the daily timeframe; using original settings (9, 26, 52) on lower timeframes may require adjustment.
Rate of Change is a pure momentum oscillator that measures the percentage change in price over a specified number of periods. It oscillates around a zero line, with positive values indicating upward momentum and negative values indicating downward momentum. ROC is useful for identifying momentum shifts, overbought/oversold conditions, and divergences that precede price reversals.
Williams %R is a momentum oscillator developed by Larry Williams that measures the current closing price relative to the highest high over a specified lookback period. It ranges from 0 to -100, with readings above -20 indicating overbought conditions and readings below -80 indicating oversold conditions. Williams %R is closely related to the Stochastic oscillator but inverted, making it particularly responsive to price reversals.
The Commodity Channel Index measures an asset's deviation from its statistical mean price, oscillating around a zero line with no fixed upper or lower bound. Originally designed for commodities by Donald Lambert, CCI is effective across all markets. Readings above +100 indicate strong bullish momentum (potential overbought), while readings below -100 signal strong bearish momentum (potential oversold).
The Parabolic Stop and Reverse (SAR) is a trend-following indicator that plots dots above or below price to define the current trend direction and provide trailing stop levels. Developed by J. Welles Wilder, the indicator accelerates toward price as the trend matures, eventually crossing price to signal a reversal. The parabolic curve of the dots gives the indicator its name.