Ichimoku

Overview

The Ichimoku Cloud, also known as Ichimoku Kinko Hyo, is a versatile indicator that defines support and resistance, identifies trend direction, gauges momentum, and provides trading signals.

Calculation

The Ichimoku Cloud is comprised of five lines:

• 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 (Leading Span A): (Conversion Line + Base Line)/2, plotted 26 periods ahead

• Senkou Span B (Leading Span B): (52-period high + 52-period low)/2, plotted 26 periods ahead

• Chikou Span (Lagging Span): Close plotted 26 periods behind

The space between Senkou Span A and B is known as the "cloud" or "Kumo".

Interpretation

The Ichimoku Cloud is interpreted as follows:

• When price is above the cloud, the trend is up. When price is below the cloud, the trend is down. Prices in the cloud indicate a neutral trend.

• The cloud edges act as support and resistance levels. If price is above the cloud and falls towards it, the cloud acts as support. If price is below the cloud and rises towards it, the cloud acts as resistance.

• The Conversion Line crossing above the Base Line is a bullish signal, and crossing below is a bearish signal.

Indicator Triggers:

So far we have 17 differents triggers for the Ichimoku indicator. Those triggers are related to many Ichimoku's components such as Cloud, Chikou, Kijun, Tenkan etc.

Ichimoku Clouds

This is how the Ichimoku Cloud looks like.

Ichimoku Clouds on Runbot.io

Cross Cloud

This trigger will be activated is the price cross up or cross down the Bearish or Bullish Senkou Cloud

A long signal will be triggered if the price cross up the Senkou Bullish Cloud.

A long is triggered as the price crossed up Senkou Bullish Cloud.

Enter Cloud

This trigger will be activated is the price enter up or enter down the Bearish or Bullish Cloud.

A long signal will be triggered if the price enter up the Senkou Bearish Cloud.

A long is triggered as the price enter up Senkou Bearish Cloud.

In Zone Cloud

This trigger will be activated is the price is above up or under the Senkou Bearish or Bullish Cloud.

A long signal will be triggered if the price is above the Senkou Bearish Cloud.

A long is triggered as the price is above Senkou Bearish Cloud.

Chikou in Zone Cloud

This trigger will be activated is the price cross up or cross down the Bearish or Bullish Senkou Cloud.

A long signal will be triggered if the Chikou line is above the Senkou Bearish Cloud.

A long is triggered as the price is above Senkou Bearish Cloud.

Cross Kijun / Chikou / Tenkan

Example : This trigger will be activated is the price cross up or cross down the Kijun Line.

A long signal will be triggered if the price cross up the Kijun line.

A long signal is triggered as the price cross up the Kijun line.

Line Cross Line

This trigger will be activated if a selected Line is crossing another selected Line of your choice. Lines available are : Kijun, Tenkan, Chikou, Senkou Span A & B.

A long signal will be triggered if the Senkou Span A line is crossing up the Kijun Line.

A long signal is triggered as the Senkou Span A line is crossing up the Kijun Line.

Cross Tenkan Kijun

This trigger works the same as the one above but only for Tenkan crossing Kijun.

Cloud Size

This trigger allow you to place signal depending of the size of the Ichimoku Clouds in terms of %.

A long signal will be triggered when the bullish Tenkan Cloud is between 0.5-3%.

A long signal is triggered as the bullish Tenkan Cloud is between 0.5-3% .

Line Distance %

This trigger allow you to place signal depending of the distance from the price of any Ichimoku's lines: Kijun, Tenkan, Chikou, Senkou Span A & B.

A long signal will be triggered when the Kijun line is above the price at a distance between 0.3-1.5%.

A long signal is triggered as the Kijun line is above the price at a distance between 0.3-1.5% (here 0.8%).

Sustain Line

This trigger allow you to place signal if a specified line stay above or under the price for a specific amount of time. All Ichimoku's lines are available: Kijun, Tenkan, Chikou, Senkou Span A & B.

A long signal will be triggered when the Kijun line is above the price for at least 3 candles of 5 minutes.

Note: "during at least x candles", the duration of the candles is related to the indicator timeframe. Here the Ichimoku indicator is setup on the 5 minutes Timeframe, so here we have to wait 3x5 candles of 5 mins, so 15 minutes.

A long signal is triggered as the Kijun line is above the price for at least 3 candles of 5 minutes.

Flat Senkou B & Kijun

This trigger allow you to place signal if the Senkou B or Kijun Line is flat for x amount of time. The amount of time, as mentionned above, is related to the Timeframe configuration of the indicator.

A long signal will be triggered when the Kijun line is flat during at least 5 candles of 5 minutes.

A long signal is triggered as the Kijun line is flat during at least 5 candles of 5 minutes.

Line Distance ATR, Line % and Line ATR

These triggers are designed to provide buying or selling opportunities based on the relationship between the Ichimoku lines and price, taking into account the distance in terms of ATR or percentage. They aim to identify moments where the price is likely to move in a favorable direction based on the trend and volatility.

Example :

A long signal will be triggered if the Kijun is under the price at a distance between 0 and 1 ATR (period 10).

A long signal is triggered as the Kijun is under the price at a distance between 0 and 1 ATR (period 10).

Notes

1. Mean Reversion Strategy: Utilize Kijun and Tenkan Crosses

For a mean reversion strategy, monitor the crossovers between the Tenkan (Conversion Line) and Kijun (Base Line). When the Tenkan crosses above the Kijun, it signals that prices might be reverting to the mean, providing a potential buying opportunity. Conversely, a Tenkan-sen cross below the Kijun-sen can signal a selling opportunity, indicating that prices might revert downward. You can use the multiple Runbot Cross trigger to exploit those patterns.

2. Trend Following Strategy: Focus on the Kumo Cloud

In trend following strategies, the Kumo Cloud (comprising Senkou Span A and Senkou Span B) is crucial. When the price is above the Kumo Cloud, it indicates a strong upward trend, making it a good time to enter long positions. Conversely, when the price is below the Kumo Cloud, it suggests a downtrend, where short positions might be favorable. The thickness of the cloud can also indicate the strength of the trend: a thicker cloud suggests a stronger trend and support/resistance levels. You can use the Cloud Size trigger to detect those patterns.

3. Momentum Trading: Observe the Chikou Span

The Chikou Span (Lagging Span) can help confirm momentum in a trading direction. If the Chikou is above the current price and other indicators (like the Kumo Cloud and Kijun), it confirms a bullish momentum, supporting long trades. If it is below, it confirms bearish momentum, suggesting short trades. Use this span to confirm the strength and direction of a move before entering a trade. Take a look at our multiples Chikou triggers in order to use this strategy.

4. Support and Resistance Levels: Utilize the Kumo Cloud and Kijun-sen

For identifying support and resistance levels, use the Kumo Cloud and Kijun. The Kumo Cloud acts as a dynamic support and resistance area. When the price approaches the Kumo Cloud, it can either bounce back or break through, signaling potential reversals or continuations. The Kijun also serves as a crucial support/resistance level; a price bounce off the Kijun can signal a reversal, whereas a break might indicate trend continuation.

By leveraging these aspects of the Ichimoku indicators, you can effectively apply them to various trading strategies and gain a better understanding of market conditions.