Ichimoku Cloud¶
OVERVIEW¶
The Ichimoku Cloud (Ichimoku Kinko Hyo, "one-glance equilibrium chart") is a multi-component Japanese trend indicator available on the Tapeboard market terminal. Developed by Goichi Hosoda over 30 years and published in 1969, it plots five lines and a forward-projected shaded region — the kumo (cloud) — directly on the price chart to display trend direction, momentum, support, and resistance in a single overlay.
Note
The cloud is projected 26 periods into the future, giving traders visibility into upcoming support and resistance levels before price arrives.
COMPONENTS¶
The indicator renders five lines plus the shaded cloud region:
| Component | Formula | Offset |
|---|---|---|
| Tenkan-sen (Conversion Line) | (9-period high + 9-period low) / 2 | None |
| Kijun-sen (Base Line) | (26-period high + 26-period low) / 2 | None |
| Senkou Span A (Leading Span A) | (Tenkan + Kijun) / 2 | +26 periods ahead |
| Senkou Span B (Leading Span B) | (52-period high + 52-period low) / 2 | +26 periods ahead |
| Chikou Span (Lagging Span) | Current close | −26 periods behind |
The cloud is the shaded area between Senkou Span A and Senkou Span B.
| Cloud Color | Condition | Signal |
|---|---|---|
| Green | Senkou A above Senkou B | Bullish |
| Red | Senkou A below Senkou B | Bearish |
SIGNAL LOGIC¶
A confirmed bullish reading requires all four conditions to be true simultaneously:
- Price is above the cloud
- Tenkan-sen is above Kijun-sen
- Chikou Span is above price 26 periods ago
- The forward cloud is green
Invert all four conditions for a confirmed bearish reading. Any mixed configuration is treated as equilibrium — not actionable on Tapeboard.
Tip
Use the Tenkan/Kijun crossover (TK cross) as your entry trigger. A TK cross occurring above a green cloud is a high-probability long entry. A TK cross below a red cloud is a high-probability short entry.
WORKED EXAMPLE¶
Instrument: QQQ | Close: $440
| Input | Value | Result |
|---|---|---|
| 9-period high / low | $445 / $425 | Tenkan = $435 |
| 26-period high / low | $450 / $410 | Kijun = $430 |
| Senkou Span A (26 bars ahead) | ($435 + $430) / 2 | $432.50 |
| 52-period high / low | $455 / $390 | Senkou B = $422.50 |
Interpretation: The forward cloud spans $422.50 – $432.50 (green, bullish). QQQ at $440 sits above the cloud; Tenkan ($435) is above Kijun ($430). The system reads as a confirmed uptrend.
- High-probability long entry zone: pullback to $422.50 – $432.50
- Invalidation level: daily close below $422.50 flips the system to neutral
HOW TO USE¶
Trend filtering Take long signals only when price is above a green cloud. Take short signals only when price is below a red cloud. Avoid trades when price is inside the cloud.
Dynamic support and resistance The upper and lower cloud boundaries act as multi-week support/resistance levels that flex with volatility. Thick clouds (wide Senkou A/B spread) provide stronger levels; thin clouds break easily.
Entry timing Use TK crosses for precise entry timing after the cloud confirms trend direction.
Forward risk management Because the cloud is plotted 26 periods ahead, place limit orders and stop levels at future cloud boundaries before price reaches them.
Multi-timeframe alignment Use the daily cloud for trend bias and the 60-minute cloud for entry timing to align both timeframes before executing.
Tip
On Tapeboard, switch between daily and intraday clouds using the timeframe selector on the chart toolbar. The cloud recalculates automatically across all supported intervals.
SETTINGS¶
| Parameter | Default | Alternative (5-day week) |
|---|---|---|
| Tenkan-sen period | 9 | 7 or 10 |
| Kijun-sen period | 26 | 22 or 30 |
| Senkou Span B period | 52 | 44 or 60 |
| Cloud displacement | 26 | 22 or 30 |
Note
The 9/26/52 defaults reflect the 1960s Japanese six-day trading week. Many US equity traders adjust to 7/22/44 or 10/30/60 to better fit the five-day week.
LIMITATIONS¶
| Limitation | Detail |
|---|---|
| Lag on reversals | The 52-period Senkou B is slow; major reversals appear in price weeks before the cloud changes color |
| Choppy in ranges | Sideways markets trigger repeated TK crosses inside the cloud, producing losing trades |
| Not standalone | Works best as a trend filter; combine with volume confirmation to reduce false TK crosses |
| Visual clutter | Five overlapping lines plus a shaded region can be difficult to read on small or compressed charts |
| Parameter dependence | Default periods may not suit all markets or trading-week lengths |