Ichimoku cloud
TrendIntermediate
Ichimoku Kinko Hyo puts trend, momentum, and support and resistance on one chart. The cloud, formed by two leading spans, is the piece most traders watch: price above the cloud is treated as an uptrend, price below it as a downtrend, and price inside it as a transition. The conversion and base lines add a faster cross, and the lagging span checks whether price agrees with where it was 26 periods ago.
Not investment advice. Nothing here is a recommendation to buy or sell anything. Backtests and historical studies are not guarantees, and a rule that worked in one sample can fail in the next. Trading can lose money. Links are for education, not endorsements. Do your own research.
- Rules
- Default settings are 9, 26, and 52 periods. A stricter long needs price above the cloud, the conversion line above the base line, and the lagging span above price. Exits often use a close back into the cloud or a conversion/base cross the other way. The cloud is plotted ahead of price, so it is a projection of past midpoints, not a forecast.
- Where AI fits
- The five lines are awkward to code by hand, so an LLM is useful for a correct implementation and a readable backtest. It can test whether the lagging-span filter removes bad trades or only reduces sample size. Parameter changes away from 9/26/52 should be checked out of sample, because the defaults are what many participants already watch.
- Markets
- Originally Japanese equities and futures. Now used on FX, indexes, and liquid stocks.
- Timeframes
- Daily and 4-hour charts are the usual home. Intraday settings need a separate test.
- Risks
- The cloud lags, and signals inside a flat cloud are noisy. A full five-line confirmation can enter late. Treating the forward-shifted cloud as a prediction of future price is a misread of the formula.