What Is Ichimoku Cloud?
Ichimoku Kinkō Hyō ('one glance equilibrium chart'), developed by Japanese journalist Goichi Hosoda in the 1930s and published in 1969, is one of the few indicators that's a complete trading system in itself. It consists of five lines: Tenkan-sen, Kijun-sen, Senkou Span A, Senkou Span B, and Chikou Span.
The 'cloud' (Kumo) is the area between Senkou Span A and B, plotted 26 periods ahead. Price above the cloud = bullish trend; below = bearish; inside the cloud = transitional/no-trend. The cloud's thickness shows trend strength — thick clouds are stronger support/resistance.
Ichimoku is heavy on the chart and intimidating to beginners, but it's genuinely useful because it combines trend, momentum, support, and resistance in one visual. The classic entry signal is a Tenkan/Kijun cross above the cloud with Chikou Span confirming. Mastery takes weeks, but for chart-pattern traders, it's worth learning.
Related terms
- Moving Average — A line plotted on a chart showing the average price over a chosen lookback period.
- Support and Resistance — Price levels where buying or selling pressure historically halts price movement.
- Trend — The general direction of price movement over a period — uptrend, downtrend, or sideways.
- MACD (Moving Average Convergence Divergence) — Trend-following momentum indicator showing the difference between two exponential moving averages.