Ichimoku Cloud Strategy: Full-System Trading
Trade with the Ichimoku Kinko Hyo: cloud, conversion/base lines, lagging span, and full-system signals.
What Ichimoku actually shows
Ichimoku is a full trading system, not an indicator. The cloud (Kumo) shows future support/resistance. The Tenkan (conversion) and Kijun (base) lines show short and medium momentum. The Chikou (lagging span) confirms the trend by showing current close plotted 26 bars back. When all five components align — price above cloud, Tenkan above Kijun, Chikou above price 26 bars ago — it's a maximum bullish alignment.
Entry signals
Primary: Tenkan crosses above Kijun, with price above cloud and Chikou in free air. Secondary: price breaks above the cloud after consolidating inside. Both require all five components in agreement — that's the discipline Ichimoku enforces. The "TK cross" alone, without cloud and Chikou confirmation, is a weak signal and fails often.
Why Ichimoku traders struggle
Overfitting to the indicator. Every Ichimoku tutorial tells you to wait for "perfect alignment," which happens 5–10% of the time. Traders take lower-probability setups to get more trades and blow up. The answer: accept that Ichimoku is a low-frequency system and fewer trades is a feature, not a bug.