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Ichimoku Kinko Hyo: reading the cloud in five steps

The "one-glance equilibrium chart": Tenkan, Kijun, the Kumo cloud, Chikou and the main signals.

What Ichimoku is

Ichimoku Kinko Hyo was developed over many years by Japanese journalist Goichi Hosoda (pen name Ichimoku Sanjin) and published in 1969. It shows trend, momentum and support/resistance at the same time.

Tenkan-sen (9)(Highest high + lowest low of 9 bars) / 2, the short-term line
Kijun-sen (26)(Highest high + lowest low of 26 bars) / 2, the medium-term balance line
Senkou Span A(Tenkan + Kijun) / 2, plotted 26 bars ahead
Senkou Span B (52)(Highest high + lowest low of 52 bars) / 2, plotted 26 bars ahead
Chikou SpanThe close plotted 26 bars back
On TradingViewIchimoku Cloud (9, 26, 52, 26)

Read it in five steps

  1. Price vs cloud: above the cloud is an uptrend, below is a downtrend, inside is neutral.
  2. Colour and thickness of the future cloud: Span A above Span B (a bullish cloud) and a thick cloud mean a solid base.
  3. Tenkan/Kijun: Tenkan crossing above Kijun is bullish; strongest when it happens above the cloud.
  4. Chikou: Chikou above the price of 26 bars ago confirms the uptrend.
  5. Kijun is equilibrium: a pullback to the Kijun in a trend is often a good entry.

How to trade it

  • Buy only when everything lines up: price above the cloud, bullish future cloud, Tenkan above Kijun, Chikou clear above old price.
  • Stop below the Kijun or below the cloud; trail it along the Kijun.
  • A thin cloud or a fresh colour change (Kumo twist) is where reversals happen more easily, so trade smaller.
TipSome crypto traders use 20-60-120-30 because the market trades 24/7; test before you change settings.
Watch outIchimoku needs a lot of data and suits H4, D1 and higher. Very small timeframes give noisy signals.

Try it on a chart

Educational content only, not investment advice. Practise on a demo account before using real money.