What is the Ichimoku cloud?
In one line: The Ichimoku cloud is an indicator with 5 lines, including a shaded "cloud," that shows trend direction and possible support or resistance in one view.
The 5 lines, in plain words
The full name is Ichimoku Kinko Hyo, roughly "one-glance balance chart." It was built in Japan by Goichi Hosoda. The usual settings are 9, 26 and 52.
- Tenkan-sen (conversion line): the midpoint of the last 9 candles' high and low. Fast.
- Kijun-sen (base line): the midpoint of the last 26 candles' high and low. Slower.
- Senkou Span A: the average of the first two lines, drawn 26 candles ahead.
- Senkou Span B: the midpoint of the last 52 candles' high and low, drawn 26 candles ahead.
- Chikou Span (lagging line): today's close, drawn 26 candles back.
The space between Span A and Span B is shaded. That's the cloud.
A simple example
Over the last 9 candles, the high was 110 and the low was 100. The conversion line is (110 + 100) ÷ 2 = 105.
Over the last 26 candles, the high was 115 and the low was 95. The base line is (115 + 95) ÷ 2 = 105 too. Span A is the average of the two, also 105, drawn 26 candles into the future.
Why it matters
The basic reads:
- Price above the cloud: the trend leans up.
- Price below the cloud: the trend leans down.
- Price inside the cloud: no clear direction.
- A thick cloud can act like a zone of Support or Resistance.
It packs a lot into one view, which is why some traders like it.
A common mistake
Turning on all 5 lines on day one. Ichimoku is busy. It's easy to stare at crossings and miss the chart itself.
Start with one question: is price above, below or inside the cloud? Learn that first, then add the rest. And remember all 5 lines are built from past highs and lows. They describe; they don't predict.
On a cluttered chart, fewer lines often show you more. Try Ichimoku alone before mixing it with other tools.
Questions
What are the Ichimoku settings?
9, 26 and 52 is the standard. Those numbers date from a time when markets traded six days a week. Some traders adjust them; many keep the default.
Does Ichimoku work for day trading?
It can be added to any timeframe. On short charts it changes quickly, so many traders use it mainly on 1-hour and daily charts.
Why is the cloud drawn ahead of price?
Spans A and B are shifted 26 candles forward so you can see where today's levels would sit later. It's a display choice, not a forecast.
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