The Ichimoku Cloud
The conversion line, base line, cloud and lagging span: trend, support and resistance, and momentum, all in one chart.
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Text version · Trend Indicators, lesson 8: “The Ichimoku Cloud”
The conversion line, base line, cloud and lagging span: trend, support and resistance, and momentum, all in one chart.
The cloud: support and resistance ahead
The Ichimoku Cloud cloud is bounded by the two leading spans and shifted 26 bars forward. Price above the cloud leans bullish, below it leans bearish, and inside it is consolidating; a green cloud leans bullish and a red cloud leans bearish.
Conversion line × base line
The conversion line (9-bar midpoint) crossing above the base line (26-bar midpoint) is a bullish signal, like a golden cross; the lagging span shifts the close back 26 bars to compare it with past prices.
Lagging span: compared with 26 bars ago
The lagging span plots today's close 26 bars back. If it's above the price back then, today is stronger than that time. Price above the cloud, a TK bullish cross and the lagging span on top: when these agree the signal is stronger, but it can still fail.
Key takeaways
- Price above the cloud leans bullish, below it bearish, and inside it is consolidation.
- The conversion line (midpoint of the last 9 highs and lows) crossing above the base line (midpoint of 26) is a bullish signal, similar to a golden cross.
- The cloud is shifted 26 candles forward, so the future cloud can act as support or resistance ahead. The lagging span shifts the close 26 candles back.
- Signals are stronger when several conditions point the same way, but they can still fail.
Try it yourself
You can do these exercises in this lesson's interactive simulation:
- Switch to "Down" and hover over the middle-to-late part: is price above, inside or below the cloud? Is that usually seen as bullish or bearish?
- Look at the curved arrow on the chart: how many bars ahead is the cloud calculated today drawn? What does the cloud in the blank space on the right represent?
- Choose "Dip, then bounce" and find the "TK bullish cross" marker: is it above or below the cloud?
- Turn off the layers one by one, leaving only "Cloud," then turn on "Lagging span" and see how many bars it's offset from price.
Quiz and explanations
- 1. Price below the cloud is usually seen as…
- Answer: Bearish.Below the cloud is bearish territory.
- 2. With default settings, how many candles forward is the Ichimoku cloud shifted?
- Answer: 26.The default settings are 9 / 26 / 52, with a 26-candle shift.
- 3. Price is above the cloud, the conversion line is above the base line, and the lagging span is above the price of 26 candles ago. What does that mean?
- Answer: Several conditions agree on bullish, so the signal is fairly strong (but it can still fail).Ichimoku is usually read by checking whether several conditions agree. When they do, the signal is stronger, but no indicator can guarantee the outcome.
Terms in this lesson
- Ichimoku Cloud: An all-in-one trend indicator made of the conversion line, base line, leading spans (the cloud) and lagging span.