Ichimoku Kinko Hyo translates roughly as "one glance equilibrium chart", which is a bold claim for something that puts five lines and a shaded cloud on a screen. It is worth learning anyway, because underneath the clutter it is one simple calculation repeated at four different speeds — and it is the only common indicator that plots part of itself into the future.
Driving a hill road, you can see the stretch ahead is clear or that fog is sitting across it. You do not know what is inside the fog. You do know that going in fast is a bad idea, and that once you are through, the road behind you is a fair guide to the road ahead.
The cloud is the fog. Above it, the road is clear and the trend is up. Below it, down. Inside it, the system says the same thing a driver would: slow down, this is not where decisions get made.
The same calculation, four speeds
Every line except one is the midpoint of the highest high and lowest low over some period. That is the whole formula. What changes is the period, and what makes the system unusual is where each line gets drawn.
| Line | Japanese name | What it is | Where it is drawn |
|---|---|---|---|
| Conversion | Tenkan-sen | Midpoint of the last 9 bars | On today |
| Base | Kijun-sen | Midpoint of the last 26 bars | On today |
| Span A | Senkou Span A | Midpoint of conversion and base | 26 bars into the future |
| Span B | Senkou Span B | Midpoint of the last 52 bars | 26 bars into the future |
| Lagging | Chikou Span | Today’s close | 26 bars into the past |
The reading that matters
Traders new to Ichimoku try to use all five lines at once and end up with a signal for every possible view. The system is far more useful reduced to one question: where is price relative to the cloud?
- The system calls this an uptrend, full stop
- The cloud top is the level bulls must defend
- Long setups from the conversion or base line have their best odds here
- A thick cloud below means stronger support than a thin one
- Inside is the state Ichimoku treats as no-trade
- Signals taken inside the cloud have the worst hit rate of any position
- Below the cloud, the cloud is overhead supply
- A twist — Span A crossing Span B — marks where the balance changed
The chart workbench draws the cloud, the conversion line and the base line as one toggle. Turn it on over a stock in a clear trend and then over one in a range — the difference in how much of the time price spends inside the cloud is the fastest way to internalise what the indicator is measuring.
Price is inside the cloud, the conversion line has crossed above the base line, and the lagging span is above the price of 26 bars ago. What does Ichimoku say?
Pahaadi rasta hai. Aage saaf dikh raha hai ya kohra pada hai — kohre ke andar kya hai, pata nahi. Cloud ke upar matlab uptrend, neeche matlab downtrend, andar matlab ruk jao. Baaki chaar lines baad mein; pehle yeh dekho ki bhaav cloud ke kis taraf hai.
- Four of the five lines are the same midpoint calculation at different speeds.
- The cloud is plotted 26 bars ahead, so future support is visible today.
- Above the cloud is an uptrend, below is a downtrend, inside is no-trade.
- The lagging span carries no forward information; it is today’s close, moved back.
- The 9/26/52 periods came from a six-day week and no longer map to the calendar.
Mark it done to track your progress through the curriculum.
Common questions
Short, direct answers to what people ask about this topic.
- ichimoku cloud meaning
- The Ichimoku cloud, or kumo, is the shaded band between Senkou Span A and Senkou Span B, plotted 26 bars ahead of the current price. Price above the cloud is the system’s definition of an uptrend, below it a downtrend, and inside it a no-trade zone. Because the band is shifted forward, today’s chart already shows where the system will place support and resistance next month, calculated from prices that have already happened.
- the shaded band between senkou span a and senkou span b is called the
- Kumo — Japanese for cloud, which is why the whole indicator is usually just called the Ichimoku cloud. Span A is the midpoint of the conversion and base lines, Span B is the midpoint of the last 52 bars, and both are drawn 26 bars into the future, so the band has thickness and its two edges act as the levels the system watches.
- what are the default ichimoku settings
- Nine, 26 and 52: the conversion line (Tenkan-sen) uses 9 bars, the base line (Kijun-sen) 26, and Senkou Span B 52, with the cloud and the lagging span both shifted 26 bars. Those periods came from a Japanese six-day trading week in which 26 sessions was roughly a month. On the NSE’s five-day week they no longer map to the calendar, and they work because the four speeds are well separated rather than because 26 means anything.
- what does it mean when price is inside the ichimoku cloud
- Inside the cloud is the state Ichimoku treats as no-trade — the market is in balance and the system has no directional opinion. Signals taken there, including a conversion line crossing above the base line, have the worst hit rate of any position in the system. Cloud position is the primary filter and the other four lines are subordinate to it, so a bullish cross inside the cloud is exactly the setup Ichimoku is designed to make you skip.
- what is the chikou span used for in ichimoku
- The Chikou or lagging span is simply today’s closing price plotted 26 bars into the past, so it can tell you exactly one thing: whether price is above or below where it was 26 bars ago, with the clutter of everything in between stripped out. It carries no forward information and is not a prediction, which makes it the most misread line on the chart.