Ichimoku Kinko Hyo

Overview

Ichimoku Kinko Hyo — literally "one-glance equilibrium chart" — was developed in Japan in the late 1930s by Goichi Hosoda, a newspaper writer who published his work under the pen name Ichimoku Sanjin. He is said to have employed a team of assistants over several years to refine the system before releasing it.

The intent is in the name. Where most indicators isolate a single facet of price, Ichimoku attempts to render the market's equilibrium — direction, support, resistance, momentum, and continuation — in a single image. It treats both price and time as inputs, and arranges five lines and one shaded band so that the position of the market can be read in a glance. It is less an indicator than a self-contained trading framework.

Calculation

Five lines and one band (the cloud). The classic parameters are 9, 26, and 52.

Tenkan-sen (Conversion Line) = (9-period high + 9-period low) / 2
Kijun-sen (Base Line) = (26-period high + 26-period low) / 2
Senkou Span A = (Tenkan-sen + Kijun-sen) / 2, plotted 26 periods ahead
Senkou Span B = (52-period high + 52-period low) / 2, plotted 26 periods ahead
Chikou Span (Lagging Line) = today's close, plotted 26 periods behind

Note that the lines are not averages of closing price. They are midpoints of the period's high-low range. A moving average tracks the average traded level; Ichimoku tracks the midpoint between the period's extremes — the price at which the period's swing was balanced. The premise of the math is different.

The cloud (Kumo) is the shaded region between Senkou Span A and B. When A is above B, the cloud is bullish; when A is below B, it is bearish. The cloud is always shifted 26 periods into the future.

How to read it

How to Read

OANDA:USDJPY

Sanyaku Kouten — the "triple bullish alignment"

The headline composite signal of Ichimoku is sanyaku ("three roles"). A bullish triple requires all three of the following at once:

• Tenkan-sen crosses above Kijun-sen
• Price is above the cloud
• Chikou Span is above the candlestick body 26 bars back

Only when all three align does the system consider a full-size position justified. The bearish triple is the mirror image. The framework explicitly refuses to act on a single crossover — its caution is part of its design.

The role of the cloud

The cloud is a band of past consensus, drawn 26 periods forward. It visualises how earlier equilibrium will likely act on future price.

• Price above the cloud → uptrend; the cloud acts as support below
• Price below the cloud → downtrend; the cloud acts as resistance above
• Price inside the cloud → no clear direction; stand aside
• Thick cloud → past consensus was strong; breakouts require large energy
• Thin cloud → past consensus was weak; the band breaks easily

Tenkan-sen and Kijun-sen

Tenkan-sen (9-period midpoint) tracks short-term momentum; Kijun-sen (26-period midpoint) tracks medium-term equilibrium.

• Tenkan above Kijun, both sloping up → strong uptrend
• Price stretched far from Kijun → tends to revert toward the base line (a guide for pullback entries)

Kijun-sen behaves much like a medium-term moving average in practice: it tends to attract price during a trend, and it often holds as psychological support or resistance.

Reading the Chikou Span

The Chikou Span plots today's close 26 periods behind. Strange at first sight — but it is a direct comparison between now and the market of 26 periods ago.

• Chikou above the candles → today's close is higher than 26 periods ago; buyers in control
• Chikou below the candles → today's close is lower than 26 periods ago; sellers in control

Anyone who bought 26 periods ago is, right now, either in profit or in loss. The Chikou Span shows that directly.

Parameter notes

Market psychology

Caveats

Related studies

• Moving Average — A simpler sibling that uses closing-price averages instead of midpoints
• MACD — A Western approach that reads the gap between two moving averages
• Trend Lines — Hand-drawn support and resistance, where Ichimoku uses the cloud