Table of Contents
In the 1960s, Ichimoku came to the public’s attention when a Japanese journalist named Ichimoku Sanjin, also known as Goichi Hosoda, came up with the Ichimoku indicator after three decades of hardship.
The Ichimoku indicator displays all the components needed to help visualize the price action better.
In this guide, we’ll discuss the nitty-gritty of the Ichimoku indicator.
The Ichimoku is a momentum indicator that is used to find the trend’s direction. It can also point out levels of support and resistance.
The Ichimoku indicator is made up of five main components that work together to offer you trading signals:
Also known as the Conversion Line, it measures the average of a price’s highest high and lowest low during the previous nine periods.
It’s calculated as: [(9-period high + 9-period low)/2].
The Kijun Sen determines the average of the highest high and lowest low prices over 26 periods. It is also called the base line.
It’s calculated as: [(26-period high + 26-period low)/2].
Also called the Lagging Span, Chiou Span lags behind the price. The Lagging Span is plotted 26 periods back.
Senkou Span A, also called the Leading Span A, defines one of the two Cloud boundaries. It is the midpoint between the Conversion Line and the Base Line.
It is calculated as : [(Conversion Line + Base Line)/2].
Its value is plotted 26 periods into the future, and it’s the faster Cloud boundary.
Also known as the Leading Span B, Senkou Span B marks the second cloud, and it’s the midpoint of the last 52 price bars.
It is calculated as [(52-period high + 52-period low)/2].
The value is plotted 52 periods into the future, and it’s the slower Cloud boundary.
As the above chart illustrates, The area between the two lines on the chart is referred to as the Kumo or cloud. The cloud, which is thicker than standard support and resistance lines, provides you with complete filtration.
The thicker cloud tends to account for the volatility of the currency markets rather than providing you with a superficially thin price level for support and resistance. A breakthrough of the cloud, followed by a move above or below it, indicates a better trade.
As mentioned above, The zone between the Leading Span A and B lines, also known as the Senkou Span A and B lines, is characterized as the cloud. Cloud edges identify both present support and resistance lines and also potential future support and resistance lines.
When prices move, the height and shape of the cloud or Kumo shift’s height and shape affect support and resistance levels. Large price fluctuations create thicker clouds, resulting in stronger resistance and support levels, while cloud height indicates the degree of price volatility.
Support and resistance levels appear to be low when the clouds are thin. Prices can break through such levels more easily during periods like these.
The cloud’s angle can be utilized to determine the strength of the trend.
A strong bullish trend is often visible when the cloud rises at a sharp angle. A strong negative trend is frequently in effect when the cloud falls at a steep angle.
Depending on price location, you can use the Ichimoku Cloud serves as a support and resistance zone. The cloud offers support and resistance levels that can be predicted. This separates the Ichimoku Cloud from other technical indicators, showing support and resistance levels for the present date and time.
You can also use the Ichimoku to find Crossovers. Look for the conversion line to climb above the base line when the price is above the cloud. This can be a strong buy indication.
You can also keep the trade open until the conversion line falls back below the base line. Any of the other lines could also be applied as exit points.
There are a number of trading strategies you can apply with the Ichimoku cloud.
Here are a few of them:
The edge-to-edge cloud configuration is the best Ichimoku cloud day trading approach.
Once a candlestick closes inside the Ichimoku cloud, the price tends to visit the other side of the Kumo cloud.
Buy signals occur when a candlestick from below the Kumo cloud breaks and closes above the Leading span A.
See signals occur when a candlestick from above the Kumo cloud breaks and closes below the Leading span A
The Kumo cloud twist happens when the Leading Span A and Leading Span B cross.
When Leading Span A crosses above Leading Span B, that’s a bullish reversal signal.
Conversely, when Leading Span A crosses below Leading Span B, which is considered a bearish reversal signal.
Swing trading with Ichimoku Cloud works extremely well if you use the Kumo twist trade signal.
A keynote to add here is that the Kumo cloud is the leading element (projected 26-periods into the future) of the Ichimoku indicator.
Although Ichimoku can work wonders, still it has its limitations.
One of the drawbacks of the Ichimoku Cloud is distinguished by the fact that it is based on historical data. While two of these data points are projected in the future, the algorithm is not essentially predictive. Averages are simply projected into the future.
The cloud can also become meaningless for extended periods if the price remains far above or below it. In these circumstances, the conversion line, the base line, and their crossovers become more relevant because they are generally closer to the price.
The Ichimoku Cloud identifies the trend or an upcoming counter-trend.
Using the cloud, you would first be able to determine the trend. Once the bias has been established, suitable signals can be evaluated using the price chart, Tenkan Line, and Kijun line.
The Tenkan line intersecting the Kijun line is a frequent approach to identify a trend.
More potential signs can be discovered by looking for price to cross the Kijune Line or the Tenkan Line.
Moreover, there are numerous strategies to trade using the Ichimoku Cloud.
If you want to receive an invitation to our live webinars, trading ideas, trading strategy, and high-quality forex articles, sign up for our Newsletter.
Subscribe to our youtube channel.
Click here to check how to get qualified.
Click here to check our funding programs.
You must be logged in to post a comment.
The5%ers let you trade the company’s capital, You get to take 50% of the profit, we cover the losses. Get your trading evaluated and become a Forex funded account trader.
Get Your Forex Funded Trading AccountOffice Hours:
Sunday – Thursday
07:00 – 15:00 GMT
Fridays
07:00 – 12:00 GMT
Email:
[email protected]
Office:
Headquarters
2 HaTidhar st, Raanana, Israel
Website Disclaimers
Five Percent Online Ltd. (“We”, “Our”, “Us”, or “Company”) operates as a proprietary trading firm. The Company is not a custodian, exchange, financial institution, trading platform, fiduciary or insurance business outside the purview of financial regulatory authorities. “The5%ers” is a brand name operated by the Company.
All trading activities conducted through the Company Hub are executed in a simulated environment. Users should be aware that the trading results in this environment do not reflect real trading outcomes. The simulated trading environment in the Hub is designed for educational and evaluation purposes only. The “funds” provided to you for the evaluation are fictitious, do not represent any currency, and that you have no right to possess those fictitious funds beyond the scope of their use within the Hub and for the sole purpose of the evaluation, and in particular that they may not and cannot be used for any actual trading and that you are not entitled to any payment or other right in or of those funds.
Becoming a funded user is not guaranteed. The eligibility for becoming a funded user is contingent upon meeting specific performance criteria and compliance with the Company’s evaluation processes. Not all users will qualify for funded accounts, and past performance in the simulated environment is not indicative of future success.
All content published and distributed by Us and Our affiliates is to be treated as general information only. None of the information provided contained herein is intended as (a) investment advice, (b) an offer or solicitation of an offer to buy or sell, or (c) a recommendation, endorsement, or sponsorship of any security, company, or fund. Testimonials appearing on the website may not be representative of other clients or customers and is not a guarantee of future performance or success. Use of the information contained on the website is at your own risk and the Company and its partners, representatives, agents, employees, and contractors assume no responsibility or liability for any use or misuse of such information.
Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, because the trades have not actually been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs, in general, are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown.
Please note that Our Services are not available in certain jurisdictions, including but not limited to: Afghanistan, Burundi, Central African Republic, Cuba, Congo Republic, Crimea, Democratic Republic of Congo, Eritrea, Guinea, Guinea-Bissau, Iraq, Iran, Israel, Laos, Lebanon, Liberia, Libya, Myanmar, North Korea, Palestinian Territory, Papua New Guinea, South Sudan, Sudan, Somalia, Syria, Vanuatu, Venezuela, and Yemen (the “Forbidden Territories”). Accessing or attempting to use Our Services from a Forbidden Territory is strictly prohibited.
This website is operated by FIVE PERCENT ONLINE LTD, a company registered in Israel with company number 515864007 and registered office at 2 Ha`tidhar street, Raanana, Israel.
Five Percent Online LTD – Copyright © 2025.
This is a timely presentation! I trade with the Ichimoku Indicator almost exclusively.I pair it with Bollinger Bands set to 100 and also I use ATR. I love it. It allows me to visually see the Market. It forces me to be disciplined, follow the rules of the Indicator, if I want to be on the winning side of a trade or… know when NOT to trade. I’ve been practicing on Demo with it for a year and I’m about to go live although I have used it in live trades a couple times. I’m presently participating in your Summer Plan and to be honest I know I could be doing better but, I like trading multiple instruments and your Platform only allows for Currencies. I’ve evolved my own style of trading; I like trading as though I have a Portfolio ie, on any given day I like to have 1-2 currency trades open with maybe a Stock(s) and of course Gold. I have found that much like a Hedge Fund if I have 1-2 of any of those trades going in the right direction they will offset any draw down I may/may not be experiencing.
Anyway thanks for the presentation!