Conversely, a downtrend is reinforced when the First Leading Line (green cloud line) is falling and below the Second Leading Line (red cloud line).

Second, the uptrend is strengthened when the First Leading Line (green cloud line) is rising and above the Second Leading Line (red cloud line). First, the trend is up when prices are above the Cloud, down when prices are below the Cloud and flat when prices are in the Cloud. There are two ways to identify the overall trend using the Cloud. Shorter moving averages are more sensitive and faster than longer moving averages. It is the same principle with moving averages. Because the Turning Line and Standard Line are calculated with 9 and 26 periods, respectively, the green Cloud boundary moves faster than the red Cloud boundary, which is the average of the 52-day high and the 52-day low. The First Leading Line is the average of the Turning Line and the Standard Line. The First Leading Line (green) and Second Leading Line (red) form the Cloud. The Cloud (Kumo) is the most prominent feature of the Ichimoku Cloud plots. Incidentally, notice that 9 and 26 are the same periods used to calculate MACD. The 26-day is slower and lags behind the 9-day. The 9-day is faster and follows the price plot closer. The relationship between the Turning Line and Standard Line is similar to the relationship between a 9-day moving average and 26-day moving average. The Standard Line (red) trails the faster Turning Line, but follows price action pretty well. Notice that it follows price action the closest. The Turning Line (blue) is the fastest and most sensitive line. The chart below shows the Dow Industrials with the Ichimoku Cloud plots. This tutorial will use the English equivalents when explaining the various plots. The default setting is 26 periods, but can be adjusted. This value is plotted 26 periods forwardĬhikou Span (Lagging Line): Close plotted 26 days ago The default calculation setting isĥ2 periods, but can be adjusted. On the daily chart, this line is the mid point of the 52 day high-low range,

Senkou Span B (Second Leading Line): (52-period high + 52-period low)/2)) Referred to as 'Leading' because it is plotted 26 periods forward. The First Leading Line forms one of the two Cloud boundaries. This is the midpoint between the Turning Line and the Standard Line. Senkou Span A (First Leading Line): (Turning Line + Standard Line)/2)) On a dailyĬhart, this line is the mid point of the 26 day high-low range, Kijun-sen (Standard Line): (26-period high + 26-period low)/2)) On a dailyĬhart, this line is the mid point of the 9 day high-low range, The default setting is 9 periods, but can be adjusted.

Tenkan-sen (Turning Line): (9-period high + 9-period low)/2))

Ichimoku cloud bounce