# Ichimoku Cloud

> Ichimoku Cloud technical indicator for identifying trend direction, support, and resistance in Veles trading strategies.

**Ichimoku Cloud** is a technical indicator that helps identify trend direction as well as potential support and resistance zones in the market.

## How Ichimoku Cloud Works

The key feature of the indicator is the **Kumo cloud**, which is built between two lines: **Senkou Span A** and **Senkou Span B**. The cloud is shifted 26 periods forward, showing potential support and resistance zones. Its color depends on the relative position of the lines: green when line A is above line B, and red when line B is above line A.

The indicator includes the following components:
1. **Tenkan-sen (Conversion Line)** — the average price over the last 9 periods. A fast signal line that reflects short-term momentum.
2. **Kijun-sen (Base Line)** — the average price over the last 26 periods. A slower line that shows the medium-term trend.
3. **Senkou Span A** — the average of Tenkan-sen and Kijun-sen, shifted 26 periods forward. Forms one boundary of the cloud.
4. **Senkou Span B** — the average price over the last 52 periods, shifted 26 periods forward. Forms the second boundary of the cloud.
5. **Chikou Span (Lagging Line)** — the current closing price shifted 26 periods backward. It is usually used for additional trend confirmation and not as a standalone signal.

**Senkou Span A formula:**
> Span A = (Tenkan-sen + Kijun-sen) / 2, shift +26 periods

**Senkou Span B formula:**
> Span B = (MAX High over 52 periods + MIN Low over 52 periods) / 2, shift +26 periods

:::note[Note]
Default indicator settings:
Tenkan-sen — Length = 9, Kijun-sen — Length = 26, Senkou Span B — Length = 52, Chikou Span — Length = 26.
:::

## Limitations

- The indicator works best in **trending markets**; in sideways market conditions, false signals are possible.
- In volatile markets or during sharp price movements, signals may arrive with a delay.
- For more reliable signals, it is recommended to use timeframes of **1 hour and above**.

## Usage in Veles Bots

The platform provides three signal types for this indicator: **“Kumo Breakout”**, **“Color Change”**, and **“Tenkan and Kijun Cross”**.

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### Ichimoku Cloud: Kumo Breakout

Used to determine the direction of the current trend.

- **Buy (long) signal** or closing a short position: appears when the candle closes above the cloud.
- **Sell (short) signal** or closing a long position: appears when the candle closes below the cloud.

### Ichimoku Cloud: Color Change

This is a leading signal that indicates a possible upcoming trend reversal.

- **Buy (long) signal** or closing a short position: **Senkou Span A** crosses **Senkou Span B** from bottom to top, and the cloud changes from red to green.
- **Sell (short) signal** or closing a long position: **Senkou Span A** crosses **Senkou Span B** from top to bottom, and the cloud changes from green to red.

:::caution[Important]
Signal calculations always account for the 26-period forward shift of the **Senkou Span** lines. This is critical for the correct interpretation of the “Color Change” filter signals. Visually, the signal lags the color change by 26 candles.
:::

### Ichimoku Cloud: Tenkan and Kijun Cross

The crossing of these lines is used as an indicator of price momentum direction.

- **Buy (long) signal** or closing a short position: appears when **Tenkan-sen** crosses **Kijun-sen** from bottom to top (a “golden cross”).
- **Sell (short) signal** or closing a long position: appears when **Tenkan-sen** crosses **Kijun-sen** from top to bottom (a “death cross”).

## Summary

Use **Ichimoku Cloud: Kumo Breakout** when:
- You need a clear signal when a key support or resistance level is broken.
- You need to determine the direction of the current trend.

Use **Ichimoku Cloud: Color Change** when:
- It is important to track a trend reversal at an early stage.
- It fits medium-term strategies.

Use **Ichimoku Cloud: Tenkan and Kijun Cross** when:
- You want to enter and exit a trade when momentum changes direction.

**Final recommendation:** combine all three signal types or supplement them with flexible components (Span A, Span B, Lagging Span, Tenkan-sen, Kijun-sen) to build multi-layered strategies with more accurate signal filtering.

Check the indicator using [backtests](https://help.veles.finance/en/platform/components/backtests/) before launching a bot.

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## Ichimoku Cloud and Flexible Indicators

In addition to the ready-made signal options, four Ichimoku Cloud components are available on the platform as standalone indicators for flexible algorithm configuration.

### Senkou Span A

**Senkou Span A** is the fast cloud boundary, calculated as the average of the Tenkan-sen and Kijun-sen lines, shifted forward by the specified number of periods.
- **Usage:** defines dynamic support in an uptrend or resistance in a downtrend.
- **Example:** when the price crosses the Span A level, it may signal a short-term direction change. It can be used as a trigger for entering or exiting a position.

### Senkou Span B

**Senkou Span B** is the slow cloud boundary, calculated as the average of the maximum and minimum prices over a specified period, shifted forward by a certain number of candles.
- **Usage:** a stronger support or resistance level compared with Span A. A wide cloud between Span A and Span B indicates a strong trend.
- **Example:** when the price stays above or below Span B, it confirms trend continuation; a breakout of Span B may signal the end of the trend.

### Tenkan-sen (Conversion Line)

**Tenkan-sen (Conversion Line)** is a fast signal line that reflects the short-term trend.

### Kijun-sen (Base Line)

**Kijun-sen (Base Line)** is the average price over a specified number of periods. It is a slower line that shows the medium-term trend.
- **Usage:** Tenkan and Kijun can be used as trend lines, and their cross can be used as a signal of momentum direction change.
- **Example:** if the price closes above the lines, it signals a stable trend. Their crossings may indicate a change in market sentiment.

:::tip[Tip]
If you are just getting started with the indicator, try combining **“Ichimoku Cloud: Kumo Breakout”** with **“Tenkan and Kijun Cross”** — this helps track both trend changes and short-term momentum shifts.
:::

## Using in Veles Bots (Flexible Indicators)

Available settings:

- Period - the length of the indicator line. Range: 5–100. Default depends on the component: Conversion Line — 9, Base Line — 26, Leading Span B — 52, Lagging Span — 26. Not applicable to signal types (Kumo Breakout, Color Change, TK Cross).
- Interval - the candle timeframe.
- Method - the calculation type. By bar close (only on the selected interval) or by minute (once per minute for any interval).
- Shift - shifts the requested indicator value back by the specified number of candles.
- Direction - "Buy" or "Sell". Here you can determine direct or reverse logic for the filter (signals only).