Ichimoku CloudKumo
The Ichimoku Cloud is a Japanese indicator system of five lines; the shaded cloud between two of them is used to judge trend, momentum and support or resistance.
The Ichimoku Cloud packs trend, momentum and support and resistance into one chart overlay. Its shaded cloud is the part most traders watch.
- Category
- Indicators and Tools
- Reading time
- 3 min
- Also called
- Ichimoku Kinko Hyo, Ichimoku
- Updated
Ichimoku in plain words
Ichimoku is an all-in-one indicator: it marks support and resistance, shows trend direction, measures momentum and gives signals.1
The Ichimoku Cloud consists of five plots, and the cloud is the shaded area between two of them, Leading Span A and Leading Span B.1
The basic rule: price above the cloud means an uptrend.2
How the five lines are built and read
Conversion Line (Tenkan-sen)
Plot the conversion line (Tenkan-sen), by default over 9 periods.1
Base Line (Kijun-sen)
Plot the base line (Kijun-sen), by default over 26 periods.1
Leading Span A
Average those two lines and shift the result 26 periods forward — that is Leading Span A, the faster edge of the cloud.1
Leading Span B
For Leading Span B, take the midpoint of the 52-period high-low range (about three months on a daily chart).1
Lagging Span (Chikou)
The close plotted back in time to compare with past price.
Read price vs cloud
Read price below the cloud as a downtrend.2
Worked examples
Example 1 — Bullish alignment
Strong buy contextA hypothetical stock at 84 trades above a cloud spanning 78–80, and Tenkan crosses above Kijun.
| Price | 84 |
| Cloud | 78–80 |
The Tenkan crossed above the Kijun with both lines and price above the cloud — the strongest version of a buy signal.2
Example 2 — Inside the cloud
No clear trendA hypothetical currency pair at 1.105 sits inside a cloud of 1.100–1.110.
| Price | 1.105 |
Neither above nor below the cloud, the trend reading is unclear.
Example 3 — Below the cloud
DowntrendA hypothetical index at 3,900 trades below a cloud at 4,000–4,050.
| Price | 3,900 |
Price was under the cloud, so the trend was down and long signals deserved less trust.2
Ichimoku vs moving averages
| Aspect | Ichimoku Cloud | Moving averages |
|---|---|---|
| Lines | Five | One or more |
| Basis | High-low midpoints | Average closes |
| Projects forward | Yes, cloud shifted 26 periods | No |
| Learning curve | Steeper | Gentle |
Where Ichimoku is used
Trend filter
Trade only with the Trend shown by the cloud.
Dynamic levels
Use the cloud as Support and Resistance.
Entry timing
Combine Tenkan/Kijun crosses with Momentum.
Multi-timeframe
Check the cloud on a higher Timeframe.
Advantages and disadvantages
Advantages
- Many views in one overlay.
- Forward-plotted cloud shows future levels.
- Clear above/below rules.
- Settings are adjustable.
Disadvantages
- Busy chart for beginners.
- Lags in fast reversals.
- Weak in sideways markets.
- Default settings come from older market schedules.
Going deeper
Read as far as you need. Each level builds on the one before it.
Midpoints, not averages of closes
Beginner
Four of its five lines are simple midpoints of the high-low range over different periods.1
One-view design
Intermediate
It combines support and resistance, momentum and trend in a single chart.2
Cloud thickness
Advanced
Span A is shifted 26 periods ahead; the wider the gap between Span A and Span B, the stronger the cloud as support or resistance.1
Common mistakes
Trading every Tenkan/Kijun cross
Check the cloud position first.
Ignoring flat clouds
Flat spans often mean a range.
Changing settings at random
Test any change.
Using it alone
Confirm with price action and volume.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- Ichimoku has five plots.
- The cloud sits between Span A and Span B.
- Price above the cloud signals an uptrend.
- Defaults are 9, 26 and 52.
- Works best in trending markets.
Frequently asked questions
What are the default settings?
What does a thick cloud mean?
Does it work in ranges?
Further learning
- Moving Average
The simpler trend line.
- Support and Resistance
What the cloud marks.
- Trend Following
Strategies that use the cloud.
- Timeframe
Choosing chart periods.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- StockCharts ChartSchool. Ichimoku Cloud (opens in a new tab) Checked .
- Fidelity. Ichimoku Cloud (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.