What is Ichimoku?
The Ichimoku Cloud draws five lines on the price chart. Two of them track the midpoint of recent ranges, two more are shifted forward to form the cloud, and the last is the close shifted back. The displacement is most of the point. The cloud sits ahead of the bars that produced it, so a zone of possible support or resistance is visible before price reaches it, and the lagging line lets the current close be compared against the price of 26 bars ago.
Ichimoku describes where price stands relative to recent ranges. It does not forecast: the forward-shifted lines are values from bars that have already closed, moved to the right so they are easier to read against what comes next.
How to use Ichimoku
- Price against the cloud. Price above the cloud is read as an uptrend, below it as a downtrend, and inside it as a market without a clear direction.
- Conversion Line against Base Line. The shorter-window midpoint crossing above the longer one means the recent range has shifted upwards relative to the medium one, and the reverse when it crosses below.
- Cloud thickness. A wide gap between the two spans marks a zone that price has historically needed more movement to get through. A thin cloud is easier to cross.
- The Lagging Span. The close drawn 26 bars back. Sitting above the candles at that point means price is higher than it was then; below means lower.
These are ways to read the lines, not entry signals on their own.
Settings
| Setting | Default | What it changes |
|---|---|---|
| Conversion Line Periods | 9 | Bars in the short window for the Conversion Line. Lower follows price more tightly. Minimum 1. |
| Base Line Periods | 26 | Bars in the medium window for the Base Line. It also feeds Leading Span A. Minimum 1. |
| Leading Span B Periods | 52 | Bars in the long window for Leading Span B, the slower edge of the cloud. Higher gives a flatter, steadier edge. Minimum 1. |
| Displacement | 26 | How many bars the two leading spans are shifted forward and the Lagging Span is shifted back. 0 draws everything on its own bar. Range 0 to 500. |
Adjust the three windows and the displacement in the indicator settings.
Calculation
Every line except the Lagging Span is the midpoint of a range: halfway between the highest high and the lowest low over a window, which includes the current bar.
midpoint(n) = (highest high over n + lowest low over n) / 2
Conversion Line = midpoint(9)
Base Line = midpoint(26)
Leading Span A = (Conversion Line + Base Line) / 2, drawn 26 bars forward
Leading Span B = midpoint(52), drawn 26 bars forward
Lagging Span = close, drawn 26 bars backBecause the lines are midpoints of ranges rather than averages of closes, they ignore where price spent its time and react only when a new high or low enters the window or an old one leaves it. That is why they run flat for long stretches and then step.
The cloud is the shaded area between Leading Span A and Leading Span B, drawn in a single colour whichever span is on top. The two spans are drawn in their own colours, so which one is higher can still be read from the lines.
Nothing is drawn past the last bar. The cloud ends at the right-hand edge of the chart instead of extending 26 bars beyond it, and the Lagging Span ends 26 bars before the edge.
Limitations
- The future cloud is not drawn. The 26 bars of cloud that would sit beyond the latest candle are not shown, so the forward zone is only visible once price has reached it.
- The cloud is one colour. It is not tinted by whether Span A is above or below Span B. Compare the two span lines to see which is on top.
- It lags. Every line is built from past highs, lows and closes. The 52-bar span in particular responds slowly to a change in trend.
- Sideways markets confuse it. In a range price drifts in and out of a thin cloud and the lines cross repeatedly, producing readings that contradict each other.
- It depends on timeframe. The windows are counted in bars, so 26 bars covers very different spans of time on 15m and on 1D.
Frequently asked questions
The Ichimoku Cloud is a set of five lines drawn on the price chart. The Conversion Line and Base Line are the midpoints of the last 9 and 26 bars' ranges. Leading Span A and Leading Span B are shifted 26 bars forward and the area between them is shaded as the cloud. The Lagging Span is the close shifted 26 bars back.
The most common reading is price against the cloud, above for an uptrend, below for a downtrend and inside for no clear direction. The Conversion Line crossing the Base Line shows the short-term range moving relative to the medium-term one, and the Lagging Span shows whether today's close is above or below price 26 bars ago. Readings agreeing with each other are generally treated as stronger than any one alone.
Yes. The indicator declares four inputs: Conversion Line Periods, default 9; Base Line Periods, default 26; Leading Span B Periods, default 52, each with a minimum of 1; and Displacement, default 26, from 0 to 500. One Displacement value is used for both the forward shift of the leading spans and the backward shift of the Lagging Span.
Values for closed bars are not revised. Two things are worth knowing. The current candle's lines move until it closes, and because the Lagging Span is drawn 26 bars back, its newest point moves on an older candle while the current bar is live. The forward-shifted spans show values from bars that have already closed, so they do not change once drawn.
Altrady Charts does not draw past the latest bar, so the 26 bars of cloud that would extend into the future are not shown. The cloud you see at the right-hand edge was calculated from bars 26 back. The rest of the indicator is unaffected.
Use the Add to chart button at the top of this page. It opens BTC/USDT on Binance in the Altrady Charts terminal with the built-in Ichimoku Cloud already applied. On any other market, open the indicator picker on the chart and choose Ichimoku Cloud from the Trend group.