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 ...
Related Articles
  1. Trading

    A Glance At An Equilibrium Chart

    The easy-to-use Ichimoku chart can tell you quite a bit in just one glance.
  2. Trading

    Swing Trading With Ichimoku Clouds

    Ichimoku Clouds offer complex market analysis in a single visual image that addresses price, trend and momentum.
  3. Trading

    An Introduction To Ichimoku Charts In Forex Trading

    Discover how this high-flying application can be used in forex trading.
  4. Investing

    Oracle Scores Another Cloud Services Win

    By virtually every measure, the cloud market is poised to explode in the coming months and years. One of the fastest-growing segments within the cloud market is the medical industry, and that's ...
  5. Trading

    Most Commonly Used Forex Chart Patterns

    These chart patterns provide entries, stops and profit targets that can be easily seen.
  6. Investing

    Cloud Investments: Profitable If Chosen Carefully

    By owning stock in cloud-based service companies, you can follow the latest trends and make money from the explosive growth in the cloud industry.
  7. Investing

    Microsoft Stock Soars on Azure Cloud Growth

    Microsoft answered the cloud call on Tuesday, and then some.
  8. Investing

    The Advantages Of SPAN Margin

    Find out how it provides futures and commodity option strategists with more bang for their margin buck!
  9. Investing

    Amazon Leads Cloud Services by Wide Margin (AMZN)

    Amazon continues to be the undisputed leader of cloud infrastructure services.
  10. Small Business

    Google's Cloudy Strategy Gets Clearer (GOOGL)

    Google, the No.4 player in cloud infrastructure services with 4% market share in 2015, last week announced plans to open data centers in Oregon and Japan to expand its cloud infrastructure and ...
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 >>
Hot Definitions
  1. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  2. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  3. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  4. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  5. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  6. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
Trading Center