What is the Ichimoku Balance Sheet?
Ichimoku Balance Sheet (一目均衡表) is a comprehensive technical analysis tool developed by Japan's Koichi Hosoda in the 1930s. The meaning of the name is ‘a sign that shows the balance of the market at a glance’. The biggest advantage is that you can see support, resistance, trend, and momentum simultaneously on one chart.
It may seem complicated at first glance, but once you understand its five components, it is a very powerful tool.
5 components
1. Transition Line (Tenkan-sen)
= (9-day high price + 9-day low price) / 2
Short-term (9 days) midpoint. Short-term support/resistance role. Similar to EMA but uses median.
2. Baseline (Kijun-sen)
= (Highest price on the 26th + Lowest price on the 26th) / 2
Mid-term (26th) midpoint. The most important support/resistance line. Criteria for determining major trends.
3. Senkou Span A
= (Conversion Line + Baseline) / 2 → Move forward 26 days
4. Senkou Span B
= (52-day high + 52-day low) / 2 → Move forward 26 days
Between leading spans A and B is Cloud/Kumo. Price above the cloud = bullish, below = bearish.
5. Chikou Span
= Move the current closing price back 26 days
To check the relationship between the current price and the price 26 days ago.
Read Kumo
| Situation | meaning | Strategy |
|---|---|---|
| Price > Cloud Platform | Bull | Long preferred |
| Price < Gureumdae | Bear | Short Preference |
| Price = Cloud vs. | uncertain | network |
| Thick Clouds | Strong Support/Resistance | High reliability |
| thin clouds | Weak support/resistance | Low confidence |
Cloud color interpretation
- Green Cloud (Leading A > Leading B): Bullish cloud → Functions as support
- Red Cloud (Leading A < Leading B): Bearish cloud → Functions as resistance
3 key trading signals
Signal 1: TK cross (conversion line/baseline cross)
- Conversion line breaks above baseline: 🟢 Bullish signal (golden cross)
- Conversion line breaks below baseline: 🔴 Bearish signal (dead cross)
However, if this cross occurs above the clouds, it is much more reliable.
Signal 2: Kumo Breakout
- Price breaks above the cloud + trading volume increases → strong upward signal
- Price breaks below the cloud + trading volume increases → strong bearish signal
Signal 3: Trailing span breakout
- Trailing span is above the price line 26 days ago + above the cloud → Strongest bullish confirmation
- Trailing span is below the price line 26 days ago → Bearish confirmation
Controversy over Ichimoku Table settings
| Settings | Traditional values | Coin Market Correction |
|---|---|---|
| transition line | 9 | 20 |
| baseline | 26 | 60 |
| Leading span B | 52 | 120 |
Since the coin market moves much faster than traditional financial markets, some traders choose to set longer time frames. We recommend experimenting with traditional values on daily bars and coin-adjusted values on 4-hour bars.
Futures Trading Ichimoku Strategy
Strategy: Cloud-to-rebound long
Conditions:
- The overall trend is upward (price above the cloud)
- Adjusted to come down to the top of the cloud zone
- A reversal candle (hammer shape, doji) appears in the cloud zone.
- TK cross (transition line > baseline)
Entry: When the cloud band rebound is confirmed
Stop loss: When the cloud zone completely breaks away
Target: previous high
Related guides
- Comparison with EMA moving average →
- Bollinger Bands + Ichimoku Balance Sheet Combination →
- Swing Trading Strategy →
- Liquidation price calculator →