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How to Use the Ichimoku Indicator

The Ichimoku Cloud marker provides traders with a file of technical metrics that can describe the planned style momentum and support or resistance levels in any financial market.

Using some generally moving, trading systems plot the shape of a "cloud" on market prices to speculate where the legacy numbers might go in the future.

This tool can help traders identify the dominant market style (bullish or bearish) and determine the right time to enter or leave an active position to achieve maximum profitability.


Designed by Goichi Hosoda in Japan in the 1960s, the Ichimoku system provides value-added information to traders compared to conventional candlestick charts.

For a moment, the Ichimoku Cloud (and the markings that make up its parts) may appear to be a very complex form of abstract art.

However, once the merchant improves the experience of reading these diagrams (and recognizing the signs that the diagrams represent), the process becomes much less scary.

Let's look at the nickname of the trading system itself, because this translation gives us a lot of data about its purpose and design:

  • Ichimoku translates to "one thought" or "one form."
  • Kinkou translates to "balance" or "balance."
  • Hyo translates to "diagram" or "plan."

In efficient terms, the Ichimoku method serves as a complete trading system that is perfect in its ability to sort between positive and negative market levels:

  • When the price goes above the Cloud, an important trading sign is a bullish (far sign).
  • When the price moves at the bottom of the Cloud, an important trading sign is bearish (short sign).
  • When price goes to the Cloud, surging price behavior is expected (and no trading activity should be initiated).

In this style sign, the Ichimoku system also shows internal signals that can be used to validate or confirm future price predictions made by the Cloud. In order to master this small trading sign, we must break down the system and examine its parts.

The calculations that make up the entire Ichimoku Cloud system include 5 different minor markers:

  • Leading Span A– the green line at the edge of the Cloud (also known as Senkou Span A)
  • Leading Span B – the red line at the edge of the Cloud (also known as Senkou Span B)
  • Alteration Route – the old blue line (also known as the Tenkan Line)
  • Underscore – yellow line (also known as Kijun Line)
  • Lagging Span – light blue line (also known as Chikou Span)

Trader's Terminology: The Japanese word for "Cloud" is "Kumo" and the Japanese word for "Line" is "Sen." Therefore, in practice, a linked phrase like “Tenkan-Sen” will only refer to the Tenkan Line (or Alteration Route). Similarly, the phrase "Kijun-Sen" would refer to the Bottom Line, otherwise "Chikou-Sen" would refer to the Lagging Range.

Traders who actively use this method will often refer to the Ichimoku sign using its original nickname. Therefore, the description of the nomenclature is very meaningful.