Ichimoku cloud strategy
Only buy when price is above the cloud and every Ichimoku line agrees, then enter on a pullback to the Kijun-sen.
Try Ichimoku cloud strategy on a real day
A real market day with the date hidden. Run the checklist on the chart, then buy, sell or stay out: the real candles answer.
Check every point of the list before you decide. Stay out if the setup is not there.
Ichimoku Kinko Hyo ("one-glance equilibrium chart") was developed by the Japanese journalist Goichi Hosoda, who published it in 1969 after decades of work. It shows trend, momentum and support in one picture, which is why many traders use it as a complete system.
Why it works
Ichimoku has five lines: Tenkan-sen (9-period midpoint), Kijun-sen (26-period midpoint), Senkou Span A and B (which form the cloud, plotted 26 periods ahead) and Chikou Span (the close plotted 26 periods back).
When price is above the cloud, the cloud is rising and the Chikou is above past price, all three timeframes the indicator measures agree on an uptrend. Pullbacks to the Kijun-sen are then buying opportunities with a nearby invalidation.
The rules
Setup
- Price closes above the cloud and the cloud ahead is green (Span A above Span B).
- Tenkan-sen is above Kijun-sen.
- Chikou Span is above the price of 26 periods ago.
Entry
- Wait for a pullback to the Kijun-sen.
- Buy on a bullish close back above the Tenkan-sen after touching the Kijun.
Stop loss
- Below the Kijun-sen, or below the cloud for a wider stop on volatile markets.
Exit and management
- Trail the stop under the Kijun-sen.
- Exit on a daily close below the Kijun or when Tenkan crosses below Kijun.
Filters that improve it
- Skip trades when price is inside the cloud: the market is in equilibrium.
- A thin cloud ahead means weak support; a thick cloud means strong support.
Worked example
Illustrative USD/JPY example on 4H: price is at 151.80, above a rising cloud whose top is 150.90. The Kijun is at 151.20. Price dips to 151.25, then closes at 151.60 above the Tenkan. Buy at 151.60, stop at 150.95, trail under the Kijun as it rises.
Illustrative numbers, not a recommendation.
Common mistakes
- Trading a Tenkan/Kijun cross that happens inside or below the cloud.
- Changing the settings without reason: 9, 26 and 52 are the standard.
- Using Ichimoku on very low timeframes, where the lines flip constantly.
How to practise it
In Candlemind, open My indicators and write the Tenkan and Kijun lines with highest() and lowest() (for example (highest(high, 9) + lowest(low, 9)) / 2). Before each trade, check the conditions in order and only act when all agree.
Pre-trade checklist
- Price above the cloud
- Cloud ahead is bullish
- Tenkan above Kijun
- Chikou above past price
- Entry on a pullback to the Kijun
Frequently asked questions
What are the Ichimoku settings?
The standard settings are 9 (Tenkan), 26 (Kijun and displacement) and 52 (Senkou Span B).
Is Ichimoku good for forex?
It was designed for Japanese markets but is widely used on major currency pairs, especially on 4H and daily charts.