Ichimoku Cloud

Introduction of Ichimoku

The Ichimoku cloud, it’s also known as Ichimoku Kinko Hyo, is a versatile indicator that defines support and resistance, identify trend direction, gauges momentum and provides trading signals.

History

Goichi Hosoda a Japanese man developed Ichimoku Kinko Hyo, in 1968 after testing more than 20 years.

Ichimoku Components

Chikou Span (Lagging Span), Tenkan Sen (Conversion Line), Kijun Sen (Base Line),

Related: Fibonacci And Money Management, click here

Tenkan Sen or Conversion Line

  • Different from 9 period SMA
  • The angle of Tenkan sen can give idea of the relative momentum of price movement over the 9 periods
  • The Tenkan sen measure the shorter-term trend
  • Used to generated trade signal

Kijun Sen Or Base Lin

  • The Kijun Sen measure the average of price high and low
  • The Kijun Sen measure the short term trend over the long term periods
  • Used to generate trade signal

Chikou Span (Lagging Span)

  • Its allow comparing the price action of 26 periods ago, which can help determine trend direction

Related: MACD, click here

Senkou Span A Or Kumo Up (Leading Span A)

  • Helping to form Ichimoku Cloud
  • Its forward 26 period and measure equilibrium
  • Showing support and resistance
  • Identifying support and resistance zone

Senkou Span B Or Kumo Down (Leading Span B)

  • Forming Ichimoku cloud
  • Following long term equilibrium measured 52 period

Cloud And Thickness

  • The leading span A and leading span B form the cloud
  • Price is above means trend up
  • Price running below confirming trend down
  • if price in between the cloud trend is sideways
  • Thickness of the cloud shows the zone of the support and resistance

Buy and Sell Signals

Ichimoku
  • Tenkan sen and Kijun sen cross each other buy or sell
  • Strong signal buy or sell: When buying signal occur above or below the cloud
  • Neutral signal buy and sell: When buy or sell occur in between the cloud
  • Weak signal buy sell signal: When buy or sell occur below the cloud

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