Ichimoku Cloud
Ichimoku Kinko Hyo ("one-glance equilibrium chart") looks like spilled paint the first time you see it. Underneath, it is five lines built from one humble idea — the midpoint of the recent range, (highest high + lowest low) ÷ 2 — computed over different windows and, in one clever twist, shifted in time.
The five lines
| Line | Construction | Role |
|---|---|---|
| Tenkan-sen (conversion) | 9-period midpoint | Fast trigger line — like a fast MA |
| Kijun-sen (base) | 26-period midpoint | Slow anchor — equilibrium; pullbacks often bounce here |
| Senkou A | (Tenkan + Kijun) ÷ 2, plotted 26 periods ahead | Together they bound the cloud (kumo) — projected support/resistance |
| Senkou B | 52-period midpoint, plotted 26 ahead | |
| Chikou (lagging) | Today's close, plotted 26 periods back | Momentum check — is price above where it was 26 periods ago? |
Reading it at one glance
- Price above the cloud — uptrend regime; below — downtrend; inside — no-man's land, the Ichimoku equivalent of "no trade zone".
- Cloud thickness — a thick cloud is layered support/resistance built from a long consolidation; a thin cloud is easily pierced.
- The twist — where Senkou A and B cross, the cloud changes colour ahead of current price: a projected regime change worth watching, not a signal by itself.
- TK cross — Tenkan crossing Kijun is the system's trade trigger, graded by location: above the cloud, a bullish cross is strong; inside it, weak; below it, counter-trend.
The full-strength signal stacks everything: price above a rising cloud, bullish TK cross, Chikou clear of past price. The system's virtue is exactly this built-in discipline — it refuses to give a strong signal in a chop.
Crypto notes
The classic settings (9/26/52) come from a 6-day Japanese trading week in the 1960s. Crypto trades 24/7, and some traders double to 20/60/120 for daily charts; both camps exist, and consistency matters more than the choice. More importantly: Ichimoku is a trend-following system, and inherits the family weakness — in ranging markets it whipsaws exactly like the moving-average crossovers it generalises. Check trend strength first.
Ichimoku is five range-midpoints, two of them projected forward — a trend filter, entry trigger, and support/resistance map in one drawing. Use the cloud as your regime line and demand full alignment before calling a signal strong.