Ichimoku cloud charts offer a holistic trend analysis tool for investors to investigate multiple unique support and resistance levels, all from a single study.
Do you suffer from analysis paralysis? With literally hundreds of technical chart studies available to choose from, it’s not that uncommon. Here’s one potential cure—a single study available on the thinkorswim® platform that can track multiple variables in one view. Called Ichimoku—and known colloquially as the Ichimoku Cloud, or just the Cloud—many use it as a go-to daily chart to view multiple trend indicators before they make a decision on an investment.
Released to the public by Japanese business journalist Goichi Hosoda in the late 1960s, Ichimoku (loosely meaning a “one look” or “one glance”) is a technical analysis tool with multiple indicators that may show whether a security is heading in a bullish or bearish direction. It also locates support and resistance levels as well as crossover buy and sell signals.
The Cloud is clearly the most distinctive feature of an Ichimoku chart—formed by two lines projecting the market trend 26 days into the future. But that’s not the only indicator it contains. The Cloud literally floats among other lines of information that can help a trader or investor determine:
Step 1: Begin on thinkorswim
Open the thinkorswim desktop (mobile instructions will vary) and select the Charts tab. Enter the symbol for the investment you want to analyze at the upper left side, then look for the beaker symbol at the upper right—the Studies tab. Select and a drop-down menu will appear—select Add Study, then on the immediate left, All Studies, which will display an alphabetical list. Under H-L, select Ichimoku, and your chart will appear.
Step 2: Learn the components
For a first glance at “one-glance” Ichimoku charting, let’s get an overview of the study’s main components. The following chart tracks the midyear 2023 performance of the S&P 500® index (SPX).
As shown above, an Ichimoku chart is composed of five different lines:
One more thing about the Cloud: The thicker it appears, the stronger a source of support or resistance it’s likely to be. The opposite is also true: the thinner, the weaker.
Now, let’s look outside the Cloud. Say a bullish crossover of the Tenkan line above the Kijun line happens while the price is below the Cloud. That should be considered only a minor bullish signal. However, when a similar bullish crossover of the Tenkan above the Kijun occurs when the price is above the Cloud, it’s considered a strong buy signal. Such a crossover indicates that the trend remains intact after a pullback or correction and represents an opportunity to get on board with the primary trend while above the cloud.
It’s important to note that an Ichimoku study can be built at any point in the day, but it’s best to build and view it after the close. That’s because intraday price moves could break an Ichimoku line, only to reverse later and leave the line intact on a closing basis. Traders can certainly rely on other intraday charts to inform their decision-making.
As with most moving average studies, the Ichimoku study is prone to false breaks of the key lines, especially on an intraday basis. But the deciding factor comes down to the closing bell and whether price has broken the relevant line on a closing basis (more on that below).
The Ichimoku is regarded as a long-term study of trending behavior, and trend-following traders should exercise patience until the price closes above or below the relevant line at the close. For example, say that the price is above the Cloud (uptrend) but price closes below the Kijun line. That would be a signal to consider taking at least a partial profit on a long position, or even exit the long position entirely. More aggressive traders could consider entering a short position in anticipation of a decline to the top of the Cloud.
Let’s look at a stock chart for Nvidia (NVDA), a leading technology stock. We’ve highlighted an area in the red oval in Figure 2 where both the Tenkan and Kijun lines are tested as the uptrend is showing signs of losing momentum. Note how frequently the price candlesticks exceed the Tenkan line, but always closes above or below it, showing its role as support and resistance. Looking ahead, if the Tenkan line makes a bearish crossover of the Kijun line on a daily close basis, a test of the cloud top is highly likely. But for now, the trend is still higher, so a trader would stay with the trend while remaining on guard for any potential bearish crossovers.
Further, the table below detail’s figure 2’s indicator lines and daily close.
| Indicator | Reading at closing bell | Technical condition | Indicator status |
| Senkou A/B (Cloud) | Senkou A above Senkou B | Bullish | Price well above a wide and rising cloud |
| Tenkan | Price above Tenkan | Bullish | Immediate, minor support level |
| Kijun | Price above Kijun | Bullish | Primary support level |
| Chikou | Above price from 26 days ago | Bullish | Uptrend is intact |
Ichimoku charts may seem complicated at first, but they deliver a range of in-depth, useful signals for traders on price performance and momentum. If you want to make the Ichimoku Cloud study a regular part of your daily technical analysis routine, consider practicing with the thinkorswim paperMoney® feature and start with a stock or exchange-traded fund you’re interested in tracking.
As you note the key levels of the Ichimoku lines—Tenkan, Kijun, Senkou A and B, and Chikou—you’ll be looking for price levels to enter or exit major trends. However, Ichimoku isn’t meant to be the only chart you use. There are many other technical analysis tools to access on thinkorswim to help you make decisions and potentially set stop levels as needed.