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trend Indicator

What Is Ichimoku Cloud (Ichimoku)?

Ichimoku Cloud is a comprehensive trend system showing support, resistance, momentum, and future price zones in one overlay.

Quick Answer

Ichimoku Cloud is a comprehensive trend system showing support, resistance, momentum, and future price zones in one overlay.

What Does Ichimoku Measure?

Ichimoku Kinko Hyo was developed by Goichi Hosoda in the late 1930s. The system plots five components: Tenkan-sen (conversion line), Kijun-sen (base line), Senkou Span A and B (forming the cloud or Kumo), and Chikou Span (lagging line). The cloud color indicates trend bias — price above a green cloud is bullish, below a red cloud is bearish. Because the cloud is projected forward, it acts as a dynamic support/resistance zone. Ichimoku is most effective on daily and higher timeframes. VaultCharts renders the full Ichimoku Cloud as a free overlay on desktop charts.

Formula:
Conversion = (9-period high + 9-period low) / 2; Base = (26-period high + 26-period low) / 2; Span A = (Conversion + Base) / 2, shifted forward 26 periods

How to Read Ichimoku

  • 1Price above the cloud indicates bullish trend
  • 2Price below the cloud indicates bearish trend
  • 3Cloud thickness reflects support/resistance strength
  • 4Conversion crossing above Base signals bullish momentum (TK cross)

How to Use Ichimoku in Trading

Identify trend direction and strength at a glance
Find dynamic support and resistance via the Kumo cloud
Trade TK crosses and Kijun-sen bounces
Use cloud thickness to gauge trend conviction

Ichimoku Settings

SettingDefaultDescription
Conversion Period9Lookback for Tenkan-sen (conversion line)
Base Period26Lookback for Kijun-sen (base line)
Span Period52Lookback for Senkou Span B
Displacement26Forward shift for cloud and lagging span

Common Mistakes to Avoid

Using Ichimoku on very short timeframes where signals lag
Ignoring the lagging span (Chikou) confirmation
Trading inside the cloud where signals are mixed
Not adjusting periods for non-standard markets (crypto, forex)

Use Ichimoku in VaultCharts

VaultCharts includes Ichimoku Cloud with customizable settings. Combine it with our automated pattern detection and trade signals for better analysis.

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