Ichimoku Cloud

What is the 'Ichimoku Cloud'

The Ichimoku cloud is a chart used in technical analysis that shows support and resistance, and momentum and trend directions for a security or investment. It is designed to provide relevant information at a glance using moving averages (tenkan-sen and kijun-sen) to show bullish and bearish crossover points. The "clouds" (kumo, in Japanese) are formed between spans of the average of the tenkan-sen and kijun-sen plotted six months ahead (senkou span B), and of the midpoint of the 52-week high and low (senkou span B) plotted six months ahead.




BREAKING DOWN 'Ichimoku Cloud'

The ichimoku cloud was developed by Goichi Hosoda, a Japanese journalist, and published in the late 1960s. It provides more data points than the standard candlestick chart.


The overall trend is up when prices are above the cloud, down when prices are below the cloud and flat when they are in the cloud itself. When senkou span A is rising above senkou span B the trend is stronger upward, and is typically colored green. When senkou span B rises above senkou span A, the trend is stronger downward and is denoted with a red-colored cloud.

RELATED TERMS
  1. Senkou Span B

    A component of the Ichimoku Kinko Hyo indicator that is used ...
  2. Senkou Span A

    A component of the Ichimoku Kinko Hyo indicator that is used ...
  3. Ichimoku Kinko Hyo

    A technical indicator that is used to gauge momentum along with ...
  4. Kijun-Sen

    A component of the Ichimoku Kinko Hyo indicator that is primarily ...
  5. Tenkan-Sen

    The mid-point between the highest high and lowest low of a particular ...
  6. Kijun Line

    The mid-point between the highest high and lowest low of a particular ...
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RELATED FAQS
  1. How can the Chikou Span help my trading strategy?

    Discover the role and uses of the Chikou span indicator, one of the five lines within the Ichimoku Kinko Hyo candlestick ... Read Answer >>
  2. How do traders create strategies based on Chikou Span?

    Learn about some of the most common trading strategies involving the Chikou span indicator from the Ichimoku Kinko Hyo charting ... Read Answer >>
  3. How do I spot support and resistance from Chikou Span?

    Understand how to interpret the Chikou span, one of the indicators that makes up the ichimoku cloud, and is used to pinpoint ... Read Answer >>
  4. How do I create a profitable strategy when spotting a Tenkan-Sen Kijun Sen cross?

    Learn how to create a simple trading strategy using the Tenkan Sen and Kijun Sen indicators, part of the Ichimoku cloud technical ... Read Answer >>
  5. Why is the Dark Cloud Cover pattern important for traders?

    Learn the significance for traders of the dark cloud cover candlestick pattern, a bearish indicator closely related to the ... Read Answer >>
  6. How do I create a trading strategy after spotting a Dark Cloud Cover pattern?

    Devise a trading strategy to take advantage of the dark cloud cover candlestick pattern, a bearish indicator that may signal ... Read Answer >>
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