Ichimoku Cloud

DEFINITION of 'Ichimoku Cloud'

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. Ichimoku Kinko Hyo

    A technical indicator that is used to gauge momentum along with ...
  2. Senkou Span A

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

    A component of the Ichimoku Kinko Hyo indicator that is created ...
  4. Senkou Span B

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

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

    A component of the Ichimoku Kinko Hyo indicator that is primarily ...
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RELATED FAQS
  1. How do I create a profitable strategy when spotting a Tenkan-Sen Kijun Sen cross?

    The Tenkan-Sen and Kijun-Sen are the two primary leading and lagging indicators within the Ichimoku cloud technical trading ... Read Full Answer >>
  2. How do I spot support and resistance from Chikou Span?

    The Chikou span is the most unique of the five indicators that make up the ichimoku cloud. It is a very different sort of ... Read Full Answer >>
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