Definition
Ichimoku Cloud
The Ichimoku Cloud is an all-in-one indicator showing trend, momentum, and support-resistance through a shaded cloud and several lines.
Ichimoku plots multiple lines — the conversion and base lines, the lagging span, and two leading spans that form the cloud (Kumo). Price above the cloud signals an uptrend and below it a downtrend, while the cloud itself acts as dynamic support or resistance; its thickness reflects the strength of that zone.
Indian traders apply Ichimoku to Nifty, Bank Nifty, and stocks for a complete trend picture in one glance, using crossovers and cloud breakouts as signals. It can look cluttered at first, so many use a subset of its components, but it remains popular for trend-following on higher timeframes.
Related terms
- SupertrendSupertrend is a trend-following indicator that plots a line below price in uptrends and above price in downtrends, using ATR.
- TrendlineA trendline is a straight line connecting a series of highs or lows to visualise the direction and slope of a trend.
- Support and ResistanceSupport is a price level where buying tends to halt a fall; resistance is a level where selling tends to cap a rise.
- Moving AverageA moving average smooths price data over a set period to reveal the underlying trend.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.