What is Ichimoku Cloud?

Hi Jane,

The Ichimoku Cloud refers to a group of technical indicators designed to determine support and resistance levels, momentum and trend direction. The indicators achieve this by taking several averages and outlining them on the chart. Ichimoku Cloud also uses the averages to calculate a so-called “cloud” which serves to predict where the price could find support or resistance.

The method was designed by Goichi Hosoda, a Japanese journalist, and put to service in the late 1960s. The cloud offers more data points compared to a standard candlestick chart.

The Cloud consists of five lines or calculations, and two of them form a cloud where the difference between the two lines appears shaded.

To calculate the Ichimoku Cloud, you could add the indicator to your chart and it will do the calculations automatically, but there’s also a way to do it manually.