The Ichimoku Kinko Hyo, or Ichimoku Cloud, is a comprehensive technical analysis tool that provides a full picture of market conditions at a glance. Unlike many indicators that focus solely on price or momentum, Ichimoku integrates trend direction, support and resistance, and momentum into a single view.
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The cloud, or Kumo, is formed by two lines — Senkou Span A and Senkou Span B — and provides a dynamic support/resistance zone. When price trades above the cloud, it signals a bullish trend; when below, a bearish trend is in play. The thickness of the cloud also reflects market volatility and trend strength — a thick cloud suggests strong support or resistance, while a thin one may indicate a potential breakout or reversal.
A key component of trading with Ichimoku is the Tenkan-sen and Kijun-sen crossover strategy. The Tenkan-sen (conversion line) acts like a short-term moving average, while the Kijun-sen (base line) serves as a longer-term trend filter. When the Tenkan-sen crosses above the Kijun-sen, it’s a bullish signal, especially if this crossover happens above the cloud. Conversely, a bearish crossover below the cloud indicates strong downside momentum. These crossovers are more reliable when confirmed by other Ichimoku elements — such as the position of the Chikou Span (lagging line), which helps validate the strength and clarity of the trend.
Ichimoku trading also emphasizes the importance of market context and patience. Because the system is designed to keep traders in strong trends, it works best in trending markets and is less effective in sideways, choppy environments. Traders often wait for multiple confirmations — such as price above the cloud, a bullish Tenkan/Kijun crossover, and a supportive Chikou Span position — before entering a position. This disciplined, multi-layered confirmation approach minimizes false signals and allows traders to ride major trends with greater confidence. When used properly, Ichimoku Kinko Hyo becomes a powerful standalone system for swing, position, or even day trading strategies.
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Money Management: It is important to follow up with this strict rule of investment: If you have $100 in your account, each open position should be $5 tops If you have $200 in your account, each open position should be $10 tops If you have $500 in your account, each open position should be $25 tops If you have $1,000 in your account, each open position should be $50 tops If you have $2,000 in your account, each open position should be $100 tops If you have $5,000 in your account, each open position should be $250 tops
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