Ichimoku Cloud Strategy

A complete trading system built from a single indicator.

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Overview

What is Ichimoku Cloud Strategy?

The Ichimoku Cloud (Ichimoku Kinko Hyo) is a comprehensive technical indicator developed by Japanese journalist Goichi Hosoda in the 1960s. Unlike most indicators that provide a single line of information, Ichimoku delivers trend direction, momentum, support and resistance levels, and even future price projections — all in one view.

The indicator consists of five components: the Tenkan-sen (conversion line, 9-period midpoint), Kijun-sen (base line, 26-period midpoint), Senkou Span A (average of Tenkan and Kijun, plotted 26 periods forward), Senkou Span B (52-period midpoint, plotted 26 periods forward), and the Chikou Span (current close plotted 26 periods back). The area between Span A and Span B forms the "cloud" (Kumo).

A bullish signal occurs when price is above the cloud, the Tenkan-sen is above the Kijun-sen, and the cloud ahead is bullish (Span A > Span B). A bearish signal is the mirror image. The cloud acts as dynamic support and resistance: a thin cloud is easily penetrated; a thick cloud represents strong support or resistance.

The Chikou Span — current price projected back in time — provides a final confirmation: it should be above past price action for a bullish signal, confirming that current momentum is genuinely strong.

How It Works in auto-Trading

Automate It

auto-Trading computes all five Ichimoku components in real time. The strategy module fires a long signal when all four bullish conditions align simultaneously: price above cloud, Tenkan > Kijun, cloud ahead is green, and Chikou above historical price. The stop is placed at the bottom of the cloud (Span B level) and the target at the next resistance structure.

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External Resources

Learn from Trusted Sources

Investopedia — Ichimoku Cloud↗

Comprehensive guide to the Ichimoku Cloud indicator and its signals.

TradingView — Ichimoku↗

Ichimoku Cloud implementations and community strategies.

BabyPips — Ichimoku↗

BabyPips' friendly introduction to the Ichimoku system.

Strategy Code

Pick a script below, copy it, and use it on your chart.

Pine Script (TradingView)

This is a TradingView Pine Script strategy example for this page concept. Paste it into the TradingView Pine Editor, add it to your chart, and run it in the Strategy Tester.

//@version=6
strategy("Ichimoku Cloud Strategy", overlay=true)
conv = (ta.highest(high, 9) + ta.lowest(low, 9)) / 2
base = (ta.highest(high, 26) + ta.lowest(low, 26)) / 2
spanA = (conv + base) / 2
spanB = (ta.highest(high, 52) + ta.lowest(low, 52)) / 2
longSignal = close > math.max(spanA, spanB) and conv > base
exitSignal = close < base
if longSignal
    strategy.entry("Long", strategy.long)
if exitSignal
    strategy.close("Long")
plot(conv, "Conversion", color=color.aqua)
plot(base, "Base", color=color.orange)

ThinkScript (thinkorswim)

This is a thinkorswim ThinkScript strategy example for this page concept. Open thinkorswim, create a custom strategy, paste the script, and apply it to your chart.

def conv = (Highest(high, 9) + Lowest(low, 9)) / 2;
def base = (Highest(high, 26) + Lowest(low, 26)) / 2;
def spanA = (conv + base) / 2;
def spanB = (Highest(high, 52) + Lowest(low, 52)) / 2;
def buySignal = close > Max(spanA, spanB) and conv > base;
def sellSignal = close < base;
AddOrder(OrderType.BUY_AUTO, buySignal, close, 1, Color.GREEN, Color.GREEN, "Ichimoku Buy");
AddOrder(OrderType.SELL_AUTO, sellSignal, close, 1, Color.RED, Color.RED, "Ichimoku Exit");
plot Conversion = conv;
Conversion.SetDefaultColor(Color.CYAN);
plot BaseLine = base;
BaseLine.SetDefaultColor(Color.ORANGE);

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