Ichimoku cloud
Ichimoku is a technical tool that gives you a full view of the market trend, support and resistance, and momentum all in one chart. The cloud area shows whether the trend is strong or not.
When the price is above the cloud, the trend is usually considered positive. When the price is below the cloud, the trend may be negative. Some traders also look for crossover signals inside the cloud.
If Bajaj Finance is trading above the cloud and the cloud is thick, it may confirm that the trend is strong. A bounce from the top of the cloud can also act as a support level.
| Parameter | Description | Default Value |
|---|---|---|
| Conversion Period (Tenkan-Sen) | The short-term moving average period | 9 |
| Base Period (Kijun-Sen) | The medium-term moving average period | 26 |
| Lagging Period (Chikou Span) | The period used for plotting the lagging line | 52 |
There are 4 outputs of Ichimoku cloud -
- Tenkan-Sen (Conversion Line): A short-term trend line calculated as the average of the highest high and lowest low over the Conversion Period.
- Kijun-Sen (Base Line): A medium-term trend line calculated similarly over the Base Period.
- Senkou Span A: The first boundary of the cloud, calculated as the average of the Tenkan-Sen and Kijun-Sen values, shifted forward by the Base Period.
- Senkou Span B: The second boundary of the cloud, calculated as the average of the highest high and lowest low over the Lagging Period, also shifted forward by the Base Period.
The area between Senkou Span A and Senkou Span B forms the “cloud” (Kumo), where its color and position relative to the price indicate bullish or bearish trends.