Strategies School / Trend & Indicators

Ichimoku Cloud Strategy

Intermediate ยท 10 min read

A single indicator that shows trend, momentum and support in one view.

What it is

Ichimoku has five lines (default 9, 26, 52). Tenkan-sen is the fast line and Kijun-sen is the slower baseline. Senkou Span A and B form the cloud (Kumo). Chikou Span is the lagging line.

Price above the cloud suggests an uptrend, below suggests a downtrend, inside means no clear trend. Tenkan crossing above Kijun, with price above the cloud, is a bullish signal.

The cloud also acts as dynamic support and resistance, and its thickness hints at strength.

How to spot it

  1. Check where price is relative to the cloud.
  2. Look for Tenkan above Kijun in an uptrend.
  3. Check that the Chikou Span is above price from 26 periods ago.
  4. Prefer pullbacks that hold above the cloud.

Trade plan

  • Entry: On a close above the cloud with a bullish Tenkan/Kijun cross, or on a pullback that holds above the cloud top.
  • Stop loss: Below the cloud or the Kijun, depending on your risk.
  • Target: The next swing high or trail the stop under the Kijun.

Common mistakes

  • Wrong: Trading inside the cloud. Right: Stay out until price leaves it.
  • Wrong: Using the default settings blindly on every market. Right: Test settings that fit your market.

Pro tip: A thick cloud is stronger support or resistance than a thin one. Thin clouds break more easily.

Quiz

  • Price above the cloud suggests: Answer: An uptrend. It signals a bullish trend.
  • The Kijun-sen is: Answer: The slower baseline. Kijun is the 26-period baseline.
  • You should avoid trading: Answer: Inside the cloud. Inside the cloud the trend is unclear.

Educational content, not financial advice. Diagrams are illustrations, not real market data.