- Ichimoku Kinko Hyo combines five lines plus a cloud (Kumo — shaded zone of future support and resistance).
- Standard settings are (9, 26, 52), unchanged since the indicator was published.
- Price above the cloud is generally read as an uptrend; below as a downtrend.
- Three-line alignment is often used as a stronger trend-confirmation signal.
Ichimoku is a single overlay that bundles trend, momentum, and support-resistance information into one chart. In practice, it shows more at a glance than most other indicators, which is also why it can feel cluttered at first.
The five lines
The components are:
- Tenkan-sen (conversion line) — short-term price average.
- Kijun-sen (base line) — medium-term price average.
- Senkou Span A and B — two lines projected forward to form the cloud.
- Chikou Span (lagging line) — current close projected backward.
Where a single moving average gives you one lookback, Ichimoku layers several at once, so you can read trend strength without flipping timeframes.
Reading the cloud
The cloud (Kumo) is the most distinctive feature.
- Price above the cloud is read as bullish context.
- Price below the cloud is read as bearish context.
- Inside the cloud means trendless or transitioning — many traders avoid signals here.
Functionally, the cloud is a dynamic support and resistance zone projected 26 periods into the future.
Practical signals
Two common patterns:
- Tenkan-sen crossing above Kijun-sen while price sits above the cloud — bullish bias.
- Three-line alignment (price > Tenkan > Kijun > cloud) — strong trend, often used to size up rather than fade.
That said, the indicator lags by design. Signals form after the move has begun.
Risks to flag
Ichimoku underperforms in choppy, range-bound markets — every component is built from moving averages, so range-bound noise produces whipsaws. It tends to work better when paired with a separate volatility filter. No indicator guarantees results.
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