Ichimoku Cloud
Ichimoku Kinko Hyo ("one glance equilibrium chart") is a comprehensive indicator system showing support/resistance, trend direction, and momentum using five lines and a "cloud" (kumo).
Understanding the Concept
Ichimoku looks intimidating but provides tremendous value. The cloud shows future support/resistance. Price above the cloud = bullish. Below = bearish. Inside = ranging. The cloud's thickness indicates strength—thin clouds are easily broken. The Tenkan/Kijun lines work like fast/slow moving averages. When Tenkan crosses above Kijun = bullish signal. The Chikou Span (lagging line) confirms signals by comparing current price to past price. Most traders simplify by focusing on cloud position and crossovers.
Real-World Example
Bitcoin trades above a thick green cloud—strongly bullish. Tenkan is above Kijun, confirming momentum. As long as price stays above the cloud, hold your longs. Cloud acting as dynamic support.
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