Indicator: What Is the Ichimoku Cloud? Reading Tenkan-sen, Kijun-sen, and the Kumo

Ichimoku Kinko Hyo — usually shortened to just "Ichimoku" or "the Ichimoku Cloud" — is a Japanese technical indicator developed in the late 1930s by journalist Goichi Hosoda and refined over decades before its public release. Unlike most indicators, which measure one thing (momentum, volatility, trend strength), Ichimoku is built from five separate lines that together answer three questions at once: where is the trend, how strong is it, and where are the key support/resistance levels likely to hold. That density is both its selling point and its biggest hurdle for beginners — a fresh Ichimoku chart looks intimidating, but each of the five lines is a simple average once you see how it's built.

Tenkan-sen and Kijun-sen

The two fastest lines in the system are the Tenkan-sen (conversion line) and the Kijun-sen (base line), and they behave a lot like a two-line moving-average setup layered on top of price.

• Tenkan-sen — the midpoint of the highest high and lowest low over the last 9 periods: (9-period high + 9-period low) / 2. Because it reacts to only the last 9 candles, it hugs price closely and turns quickly when momentum shifts.
• Kijun-sen — the same calculation over 26 periods: (26-period high + 26-period low) / 2. It moves slower and acts more like a medium-term trend gauge — many traders treat a flat Kijun-sen as a sign the market is resting, and a sharply sloped one as confirmation a trend is underway.

Notice that both lines are midpoints of the high-low range, not moving averages of the close. This makes Ichimoku's lines a little less sensitive to single-candle noise than a plain Moving Average, since a single spike high or low only shifts the midpoint gently. The relationship between these two lines is also a trading signal in its own right — when price sits above both lines, Kijun-sen often acts as a support shelf on pullbacks, similar to how a 20 or 50-period MA is used, but reacting a step faster because of the shorter lookback windows involved.

Senkou Span A, Senkou Span B, and Chikou Span

The other three lines are what make Ichimoku genuinely different from a moving-average system, because two of them are deliberately displaced in time.

• Senkou Span A (leading span A) — the midpoint of Tenkan-sen and Kijun-sen, i.e. (Tenkan-sen + Kijun-sen) / 2, but plotted 26 periods ahead of the current price.
• Senkou Span B (leading span B) — the midpoint of the highest high and lowest low over the last 52 periods, also plotted 26 periods ahead.
• Chikou Span (lagging span) — simply the current closing price, plotted 26 periods behind, overlaid on past price action so you can see at a glance whether today's close is above or below where price was 26 candles ago.

The gap between Senkou Span A and Senkou Span B, shaded in, is the Kumo — the "cloud" that gives the indicator its nickname. Because both spans are projected forward, the cloud extends into the future, giving you a visible zone of potential support or resistance before price even gets there. This forward projection is the single most unusual design choice in all of retail technical analysis — no other mainstream indicator draws anything on the right-hand, not-yet-happened side of the chart.

Entry Conditions

• BUY — price breaks and closes above a bullish (green) cloud, with the Tenkan-sen crossing above the Kijun-sen for confirmation.
• SELL — price breaks and closes below a bearish (red) cloud, with the Tenkan-sen crossing below the Kijun-sen for confirmation.

The Tenkan/Kijun cross works exactly like a fast-over-slow moving-average crossover, just compressed into shorter lookback periods (9 and 26 instead of, say, 50 and 200), so it fires noticeably earlier than a typical MA cross — at the cost of also firing more often on noise. Requiring the cloud break and the cross to line up is what separates a real Ichimoku signal from a coin-flip: the cloud break tells you price has cleared a real supply/demand zone, and the cross tells you short-term momentum agrees. Many traders add a third filter — only taking the signal if the Chikou Span is also clear of price from 26 periods ago, confirming there's no nearby historical resistance directly behind the lagging line.

Reading Cloud Thickness and Color

Two visual properties of the Kumo carry information the lines alone don't give you: color and thickness.

• Color — when Senkou Span A sits above Senkou Span B, the cloud is shaded green (bullish bias): the market's medium-term structure favors buyers. When Span A sits below Span B, the cloud shades red (bearish bias). This color is really a forward-looking summary of where Tenkan-sen and Kijun-sen have recently averaged out, so a color flip is a genuine early warning that the underlying trend is turning, well before price itself reverses.
• Thickness — a thick cloud means Span A and Span B are far apart, which happens when the market was volatile or strongly trending during the lookback window. A thick cloud acts as a strong support/resistance zone — price tends to struggle and chop when it tries to punch through. A thin cloud means the two spans are close together, signaling the zone is weak and likely to be sliced through quickly. Thin clouds also often mark "twist" points, where Span A and Span B cross — these are widely watched as places where a trend is statistically more likely to change direction, similar in spirit to how ADX dropping toward 20 warns that a trend is losing strength.

Combining the two — a thick green cloud below price, thickening further ahead — is one of the cleanest "stay in the trend" reads available on an Ichimoku chart, since it tells you both the direction and the durability of the support underneath you.

Ichimoku vs. a Simple Moving Average Crossover

A classic two-MA crossover system (say, a 9 and 26-period MA) gives you exactly one thing: a timing signal for when the short-term trend flips relative to the longer-term one. Ichimoku's Tenkan/Kijun pair does that same job, but bundles it with two features an MA crossover doesn't have — a visible, pre-drawn support/resistance zone (the cloud) and a rough gauge of trend strength via cloud thickness. In practice this means an Ichimoku trader can look at a single chart and answer "where's the trend, is it strong, and where would I expect it to pause" without adding a second or third indicator underneath the price panel, whereas an MA-crossover trader typically needs to add something like ADX or check support and resistance levels manually to get the same picture.

The cost is clutter. Five lines (plus a shaded region) sitting directly on the price candles is a lot more visually busy than two clean MA lines, and beginners frequently misread which line is which until they've spent real screen time with the indicator. A simple MA crossover is also easier to backtest and automate cleanly, since it's one comparison of two numbers — Ichimoku's full rule set (cloud break + cross + Chikou confirmation) is inherently a multi-condition system, which is more powerful but slower to evaluate at a glance.

A Word of Caution

Ichimoku's biggest source of beginner confusion is the forward offset itself. Because Senkou Span A and B are plotted 26 periods ahead of the current candle, newcomers often assume the cloud is broken or the chart is glitched the first time they see empty space on the right side of the price action filled in with a shaded polygon. It isn't a bug — it's the indicator projecting today's Tenkan/Kijun midpoint and the 52-period range forward in time, and it takes a session or two of just watching the cloud update in real time before it feels intuitive rather than alarming.

The second caution is about origin and calibration. Ichimoku was designed by Hosoda specifically for daily charts on Japanese equities, where the 9-26-52 settings map loosely onto a Japanese trading week and month at the time. Applied directly to forex, especially on lower timeframes like M15 or M5, those same period counts don't carry the same "weekly/monthly" meaning, and some traders adjust the settings (for example scaling toward the pair's typical session structure) or simply accept that the levels are heuristic rather than exact. As with any indicator, it performs best as a structural overlay used alongside trend vs range context, not as a mechanical, no-questions-asked signal generator.

Download the Indicator

This custom indicator plots all five Ichimoku lines and the Kumo cloud, with automatic alerts when price breaks the cloud or the Tenkan-sen crosses the Kijun-sen. It's available for both MetaTrader 4 and MetaTrader 5 below.

How to Install — MetaTrader 4

1. Download the ichimoku-alert.mq4 file below.
2. Open MetaTrader 4 → click File → Open Data Folder.
3. Place the file in the MQL4/Indicators folder.
4. Restart MetaTrader 4, then drag the indicator from the Navigator window onto the chart.

How to Install — MetaTrader 5

1. Download the ichimoku-alert.mq5 file below.
2. Open MetaTrader 5 → click File → Open Data Folder.
3. Place the file in the MQL5/Indicators folder.
4. Restart MetaTrader 5, then drag the indicator from the Navigator window onto the chart.

Both files are source code — open and review the full code before using it, for your own safety.