Ichimoku Cloud: the complete guide

Where Ichimoku comes from

Ichimoku Kinko Hyo, roughly “equilibrium chart at a glance”, was developed by the Japanese journalist Goichi Hosoda and published in the late 1960s. It was designed for daily charts in markets that traded six days a week, which explains its default numbers: 9, 26 and 52.

The idea is to read a market as a balance between midpoints of recent ranges. A midpoint is simply the highest high plus the lowest low over a window, divided by two.

The five components

Tenkan-sen = midpoint of the last 9 periods
Kijun-sen = midpoint of the last 26 periods
Senkou Span A = (Tenkan + Kijun) / 2, plotted 26 periods ahead
Senkou Span B = midpoint of the last 52 periods, plotted 26 periods ahead
Chikou Span = today’s close, plotted 26 periods back

The area between Senkou Span A and B is the Kumo, or cloud. It is shaded green or red depending on which span is on top. A thick cloud marks a zone where the price has to cross a lot of historical ranges; a thin cloud marks a weaker zone.

Reading the cloud

A price above the cloud describes an uptrend context, below the cloud a downtrend context, and inside the cloud a market without a clear direction. The cloud edges also act as dynamic support and resistance zones.

The Kijun-sen works like a slower moving average and is often used as a reference level. When the Tenkan-sen crosses the Kijun-sen, it signals a change in short-term momentum, with the same caveats as any moving-average cross: it confirms a move already under way.

The Chikou Span compares today’s close with the price 26 periods ago. If it sits above the past price action, the current move has had room to run; if it sits inside past candles, it is hitting congestion.

Common mistakes

• Counting every Tenkan/Kijun cross as a signal. Inside a flat cloud, they cross constantly.
• Forgetting that the cloud is drawn in the future: it is calculated from past data, not a forecast.
• Using the 9/26/52 defaults on markets and timeframes they were not designed for without checking that they still make sense.
• Reading Ichimoku in isolation. Volatility, volume and key price levels still matter.

Ichimoku in InvestAI

InvestAI includes Ichimoku among its 21 technical indicators. The app computes the lines from the asset’s own candles, tells you whether the price is above, inside or below the cloud, and explains the reading in plain words. It is information, not a recommendation to act.