Goichi Hosoda, writing as Ichimoku Sanjin
Ichimoku: the only chart in this library that draws its levels ahead of price
Goichi Hosoda spent decades and a team of assistants developing a chart that would answer, at a glance, three questions most traders need three indicators for: which way is this trending, where is support, and is the move losing strength. The result is unlike anything else in technical analysis, chiefly because it projects part of itself into the future — the cloud you are looking at today was computed from prices a month ago.
- Style
- Trend following
- Approach
- Mechanical
- Difficulty
- Advanced
- Horizon
- Swing (days to weeks)
- Holding period
- Weeks
- Time needed
- 20 minutes a day
- Markets
- FX · Index futures · Single stocks
- Source
- Ichimoku Kinko Hyo, published in the 1960s after decades of development — Goichi Hosoda, writing as Ichimoku Sanjin
The rule set
- Price above the cloud is a bullish regime; below it, bearish; inside it, no regime and no trade
- The conversion line crossing above the base line, while price is above the cloud, is the standard long signal
- The lagging span should be above the price of its corresponding period — a confirmation most people skip
- A future cloud changing colour warns that the regime may be turning, ahead of price
- Stops reference the cloud edge or the base line rather than an arbitrary percentage
What makes it distinctive
- Direction, momentum and expected support from a single picture, with no stack of separate indicators to reconcile
- Cloud thickness is itself a measure of how much support or resistance to expect — information no single line provides
- The parameters are fixed by convention and rarely optimised, which limits the scope for curve fitting
When it works
Markets that trend in long, clean swings with orderly pullbacks — FX majors and index futures in particular, which is close to what Hosoda designed it on.
When it fails
While price sits inside the cloud, every signal the system generates is unreliable, and price can remain inside it for weeks. Requiring five lines to agree makes entries noticeably late, and on short timeframes the false signal rate rises sharply.
How a decision moves through it
Input
Daily highs and lows
Highs and lows, not closes. Every Ichimoku line is a midpoint of a range, which is the most commonly misunderstood fact about the system.
Measure
Tenkan (9) and Kijun (26) — the conversion and base lines
Midpoints of the 9- and 26-period ranges. The faster line crossing the slower is the trigger; the slower line is also the standard trailing reference.
Measure
The cloud, projected 26 periods forward
Senkou A is the midpoint of Tenkan and Kijun; Senkou B is the 52-period midpoint. Both are drawn 26 periods ahead, so today's cloud was computed from data a month old.
Measure
Chikou — the lagging span, plotted 26 periods back
Today's close, drawn a month in the past. It answers whether the current price is above or below where the market was trading a month ago, without any obstruction from recent bars.
Decide
All conditions aligned
Price above cloud, Tenkan above Kijun, lagging span clear, cloud ahead of price bullish. Requiring all four is what makes signals rare and late.
Act
Enter, trail on the base line or cloud edge
The exit references the same lines as the entry, which is what keeps the system internally consistent.
The feature nothing else here has: displacement in time
Every other indicator in this library describes the present or the recent past. Ichimoku deliberately shifts two of its five components along the time axis — the cloud forward by 26 periods, the lagging span backward by 26.
The consequence is that today's cloud is not a statement about today. It was computed from prices roughly a month ago and drawn ahead so you can see where support is expected to be before price arrives there.
Hosoda's reasoning was about equilibrium — the name Ichimoku Kinko Hyo translates roughly as 'one glance equilibrium chart'. Price is understood as oscillating around a balance, and the displaced cloud is an attempt to show where that balance will sit when price gets there.
The lines are midpoints, not moving averages
Nearly every English-language description calls Tenkan and Kijun moving averages. They are not. Each is the midpoint of the highest high and lowest low over its period: (highest high + lowest low) ÷ 2.
| Moving average | Ichimoku midpoint | |
|---|---|---|
| Input | Closing prices | Highest high and lowest low |
| Behaviour in a range | Drifts with the closes | Perfectly flat until a new extreme |
| Sensitivity | Every bar contributes | Only the two extremes matter |
| What a flat line means | Closes have balanced out | No new high or low in the whole period |
The flat sections are the tell. A Kijun that runs perfectly horizontal for two weeks is saying something precise — no new 26-period extreme has occurred — and a moving average never produces that shape.
Those flat sections are treated by experienced users as significant levels in their own right, on the reasoning that a horizontal Kijun marks a genuine equilibrium price that the market keeps returning to.
Where 9, 26 and 52 come from
The numbers are not mathematical. Japanese markets traded a six-day week when Hosoda developed the system, so 26 was roughly a month of trading days, 9 about a week and a half, and 52 two months.
Under a five-day week the direct equivalents would be closer to 7, 22 and 44. Almost nobody uses those, and the reason is not analytical — the original numbers are what everyone watches, which arguably makes them self-reinforcing at the levels they produce.
Five ways into this system
- The five lines, what each one measures, and the signal they combine intoFive lines, each computed differently, and a signal that requires four separate conditions to agree.9 min read
- Sizing against a stop that the chart chooses for youThe system supplies natural stop levels and they are often a long way from a late entry. That distance is the sizing constraint.6 min read
- Where a chart built for long clean swings actually worksThe system assumes orderly, continuous price action. Markets that gap or chop violate that assumption in ways the five lines cannot absorb.5 min read
- Inside the cloud, and the lateness the confirmations buyOne structural failure state, one designed-in cost, and one problem that is really about the user rather than the system.7 min read
- Ichimoku for beginners: reading the cloud without memorising JapaneseThe most visually intimidating chart in this library, explained in the order that makes it comprehensible: the cloud first, everything else afterwards.7 min read
The ideas behind it
This system assumes you already know these. Each one is explained from scratch in Investing 101.
Compare with
- Elder Triple ScreenLet the weekly chart decide which direction you are allowed to trade, then use the daily chart to wait for a pullback and buy into it.
- Keltner Channel BreakoutDraw a moving average with bands set by recent volatility, and trade closes outside the bands in the direction the average is already pointing.
These are documented methods described for study. Nothing here is investment advice, a recommendation, or a claim about future returns — every system on this page has losing periods, and the pages say where.
Reading about a system is not having one.
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