Ichimoku Cloud: reading all five lines without memorising rules

What it measures

Ichimoku is a complete system rather than an indicator: five lines that together describe trend, momentum, support and resistance on one chart.

Every line is built from midpoints of past ranges, not from averages of closes, which makes the system respond to where a market has traded rather than to where it settled.

How it is calculated

These are the steps Basis performs, verified against the published definition.

1. 1

   The conversion line is the midpoint of the highest high and lowest low over the short period.

2. 2

   The base line is the same midpoint over the medium period.

3. 3

   Leading span A is the midpoint of the conversion and base lines, plotted forward by the displacement.

4. 4

   Leading span B is the midpoint of the highest high and lowest low over the long period, also plotted forward.

5. 5

   The lagging span is the close, plotted backward by the displacement. The cloud is the area between the two leading spans.

Settings

Nine, twenty-six and fifty-two come from a six-day trading week and do not map cleanly onto a market that never closes. Many crypto traders double them or move to 20/60/120; the system still works, but the levels stop lining up with what everyone else is watching.

How to read it

• Price above the cloud is bullish, below it bearish, inside it undecided. That single reading carries most of the system’s value.
• The cloud’s thickness is a measure of how contested the zone is — a thin cloud is easy to cut through, a thick one is not.
• The conversion crossing the base line is the fastest signal and matters most when it happens on the correct side of the cloud.
• The lagging span being clear of the price action from the displacement period ago is the system’s confirmation step.

Where it misleads

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