Ichimoku Cloud Guide
The Ichimoku Cloud system is a complete trading method that shows trend direction, support/resistance, and buy/sell signals at a glance.
What Is Ichimoku?
Ichimoku Kinko Hyo is a Japanese trading method that combines five components:
- Tenkan-sen (conversion line)
- Kijun-sen (base line)
- Senkou Span A (leading span A)
- Senkou Span B (leading span B)
- Chikou Span (lagging span)
The space between Senkou Span A and B forms the "cloud" (Kumo).
How To Use Ichimoku?
1. Trend Direction
When price is above the cloud, the trend is bullish. Below the cloud, the trend is bearish. Inside the cloud, the market is neutral.
2. Cloud as Support/Resistance
The cloud acts as dynamic support and resistance. The thicker the cloud, the stronger the level.
3. Tenkan/Kijun Crossover
When the Tenkan-sen crosses the Kijun-sen from below to above, it is a buy signal. From above to below, it is a sell signal.
4. Chikou Span Confirmation
The Chikou Span (lagging span) should be above price for a bullish signal and below for a bearish signal.
Tips
- Ichimoku works best on higher timeframes (4H, Daily)
- Use the cloud as your primary filter
- Wait for convergence of multiple signals
Conclusion
Ichimoku can seem overwhelming, but it is a powerful complete system. Start with the cloud and gradually expand your knowledge.
