Ichimoku cloud
The Ichimoku Cloud, also known as Ichimoku Kinko Hyo, is a versatile technical indicator that provides a comprehensive view of market trends, momentum, and potential support/resistance levels. It comprises multiple components plotted on the chart, forming a “cloud” that visually represents areas of equilibrium in the market. The indicator is particularly useful for identifying trend reversals and confirming the strength of trends.
| 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.