What Is Ichimoku Cloud?
The Ichimoku Cloud (Ichimoku Kinko Hyo) is an all-in-one indicator that shows support, resistance, trend direction, and momentum simultaneously. It consists of five lines: Tenkan-sen (conversion line, 9-period), Kijun-sen (base line, 26-period), Senkou Span A and B (forming the cloud, projected 26 periods ahead), and Chikou Span (lagging line).
How Ichimoku Cloud Works
The cloud (Kumo) is the most visually distinctive element — when price is above the cloud, the trend is bullish; below the cloud, bearish; inside the cloud, the trend is neutral. A green cloud (Span A above Span B) is bullish; red is bearish. Cloud thickness indicates support/resistance strength. The Tenkan/Kijun cross generates trading signals similar to moving average crossovers.
Why It Matters for Traders
Ichimoku is particularly effective in crypto because it provides forward-looking levels (the cloud projects ahead). A thin cloud ahead suggests an area where trend changes are more likely. The system works best on daily and weekly timeframes and is most powerful in trending markets. In choppy markets, the cloud flattens and the signals become unreliable — this itself is useful information about market condition.
