Ichimoku Cloud (Ichimoku) - Built-in Indicator Guide

Ichimoku Cloud indicator with conversion, base, lagging span, and leading spans A and B, forming a cloud for trend and support/resistance.

Overview

The Ichimoku Cloud is a comprehensive trend-following indicator that displays multiple timeframes in a single view. It consists of five lines: the Conversion Line (Tenkan-sen), Base Line (Kijun-sen), Lagging Span (Chikou Span), Leading Span A (Senkou Span A), and Leading Span B (Senkou Span B). The area between Leading Spans A and B forms the cloud (Kumo), which acts as dynamic support/resistance and indicates trend direction.

This indicator is designed for trending markets where it helps identify trend direction, momentum, and potential support/resistance levels. The cloud’s color (green when A > B, red when B > A) signals bullish or bearish sentiment. Price relative to the cloud determines the overall trend: above is bullish, below is bearish, and inside suggests consolidation.

How it works

1. Compute the Conversion Line as the Donchian midpoint over conversion_periods (default 9).
2. Compute the Base Line as the Donchian midpoint over base_periods (default 26).
3. Compute Leading Span A as the average of the Conversion Line and Base Line.
4. Compute Leading Span B as the Donchian midpoint over lagging_span_2_periods (default 52).
5. Return the Conversion Line and Base Line for the current bar.
6. Return the Lagging Span (current close) plotted with an offset of -displacement + 1 (default -25).
7. Return Leading Span A and Leading Span B plotted with an offset of displacement - 1 (default 25), forming the cloud.
8. Fill the area between Leading Spans A and B: green when A > B, red when B > A, using plot.Fill with the same offset.

Mathematical model

Logic flow

flowchart TD
A["Start"] --> B["Compute Conversion Line: Donchian(conversion_periods)"]
B --> C["Compute Base Line: Donchian(base_periods)"]
C --> D["Compute Leading Span A: mean(Conversion, Base)"]
D --> E["Compute Leading Span B: Donchian(lagging_span_2_periods)"]
E --> F["Determine fill colors: if A > B then green else red"]
F --> G["Return lines with offsets and fills"]

Parameters

Code walkthrough

Mean Helper Function

Lines 6-8 of Ichimoku Cloud.indie5:

def mean(price1: SeriesF, price2: SeriesF) -> float:
    # TODO: implement @algorithm avg with variable number of arguments in indie.algorithms
    return (price1[0] + price2[0]) / 2

A simple helper that averages two series values at the current bar. It is used to compute Leading Span A from the Conversion and Base lines. The function accesses the current value via [0] and returns a float.

Indicator Decorators and Parameters

Lines 12-23 of Ichimoku Cloud.indie5:

@indicator('Ichimoku', overlay_main_pane=True)  # Ichimoku Cloud
@param.int('conversion_periods', default=9, min=1, title='Conversion Line Length')
@param.int('base_periods', default=26, min=1, title='Base Line Length')
@param.int('lagging_span_2_periods', default=52, min=1, title='Leading Span B Length')
@param.int('displacement', default=26, min=1, title='Lagging Span')
@plot.line(color=color.BLUE, title='Conversion Line')
@plot.line(color=color.RED, title='Base Line')
@plot.line(color=color.GREEN, title='Lagging Span')
@plot.line('ls_a', color=color.GREEN(0.6), title='Leading Span A')
@plot.line('ls_b', color=color.RED(0.6), title='Leading Span B')
@plot.fill('ls_a', 'ls_b', title='Background Up', color=color.GREEN(0.1))
@plot.fill('ls_a', 'ls_b', title='Background Down', color=color.RED(0.1))

The @indicator decorator sets the indicator name and overlays it on the main chart pane. Four integer parameters control the periods and displacement. The @plot decorators define five lines and two fills with specific colors and titles. Note that Leading Span A and B use custom plot IDs (‘ls_a’, ‘ls_b’) and fills reference those IDs.

Main Computation and Return

Lines 24-40 of Ichimoku Cloud.indie5:

def Main(self, conversion_periods, base_periods, lagging_span_2_periods, displacement):
    conversion_line = Donchian.new(conversion_periods)
    base_line = Donchian.new(base_periods)
    lead_line1 = mean(conversion_line, base_line)
    lead_line2 = Donchian.new(lagging_span_2_periods)[0]

    fill_up_color = None if lead_line1 > lead_line2 else color.TRANSPARENT
    fill_down_color = color.TRANSPARENT if lead_line1 > lead_line2 else None
    return (
        conversion_line[0],
        base_line[0],
        plot.Line(self.close[0], offset=-displacement + 1),
        plot.Line(lead_line1, offset=displacement - 1),
        plot.Line(lead_line2, offset=displacement - 1),
        plot.Fill(offset=displacement - 1, color=fill_up_color),
        plot.Fill(offset=displacement - 1, color=fill_down_color),
    )

Inside Main, Donchian.new creates series for the Conversion and Base lines. Leading Span A is computed via the mean helper. Leading Span B is the current value of a Donchian series. The return tuple includes: Conversion Line, Base Line, Lagging Span (close with negative offset), Leading Span A and B (with positive offset), and two Fill objects with conditional colors based on whether A > B.

Offset Logic for Lagging and Leading Spans

Lines 35-39 of Ichimoku Cloud.indie5:

        plot.Line(self.close[0], offset=-displacement + 1),
        plot.Line(lead_line1, offset=displacement - 1),
        plot.Line(lead_line2, offset=displacement - 1),
        plot.Fill(offset=displacement - 1, color=fill_up_color),
        plot.Fill(offset=displacement - 1, color=fill_down_color),

The Lagging Span uses offset = -displacement + 1, which shifts the current close backward by displacement-1 bars. Leading Spans A and B use offset = displacement - 1, shifting them forward. This creates the classic Ichimoku time displacement: the cloud is plotted into the future, and the lagging line is plotted into the past.

Reading the chart

• Conversion Line (blue): Fast trend indicator; price above suggests short-term bullish momentum.
• Base Line (red): Slower trend indicator; acts as support/resistance.
• Lagging Span (green): Current price plotted 25 bars back; used to confirm trend when it is above/below historical price.
• Leading Span A (green, 0.6 opacity): Future cloud boundary; average of Conversion and Base lines.
• Leading Span B (red, 0.6 opacity): Future cloud boundary; Donchian midpoint of 52 periods.
• Cloud Fill: Green when Leading Span A > B (bullish), red when B > A (bearish).
• Price relative to cloud: Above cloud = bullish trend, below = bearish, inside = consolidation.
• Crossovers: Conversion crossing above Base (TK cross) is bullish; below is bearish.

Implementation notes

• All lines use Donchian midpoints (average of highest high and lowest low over the period).
• Leading spans are plotted into the future (offset displacement-1), so they repaint as new bars form.
• The Lagging Span uses a negative offset, shifting the close backward; it does not repaint because it uses the current close.
• If either Leading Span is NaN (insufficient bars), the fill may not appear; the code does not explicitly handle NaN.

FAQ

How do I adjust the periods for a different timeframe?

Change the parameters conversion_periods, base_periods, lagging_span_2_periods, and displacement in the indicator settings. Common values for daily charts are 9, 26, 52, 26; for intraday, you may scale them proportionally.

What does the cloud color indicate?

The cloud is green when Leading Span A is above Leading Span B, suggesting bullish momentum. It is red when B is above A, suggesting bearish momentum. The cloud thickness also indicates volatility.

How should I interpret a Conversion Line crossover of the Base Line?

A crossover of the Conversion Line above the Base Line (TK cross) is a bullish signal, especially if it occurs above the cloud. A crossover below is bearish. This is a classic Ichimoku trading signal.

Full source code

Indie Script v5, the built-in indicator as shipped with TakeProfit. Add it from the indicators menu or copy the code into the platform’s script editor.

# indie:lang_version = 5
from indie import SeriesF, MutSeriesF, indicator, param, plot, color
from indie.algorithms import Donchian


def mean(price1: SeriesF, price2: SeriesF) -> float:
    # TODO: implement @algorithm avg with variable number of arguments in indie.algorithms
    return (price1[0] + price2[0]) / 2


# TODO: Add palette of colors
@indicator('Ichimoku', overlay_main_pane=True)  # Ichimoku Cloud
@param.int('conversion_periods', default=9, min=1, title='Conversion Line Length')
@param.int('base_periods', default=26, min=1, title='Base Line Length')
@param.int('lagging_span_2_periods', default=52, min=1, title='Leading Span B Length')
@param.int('displacement', default=26, min=1, title='Lagging Span')
@plot.line(color=color.BLUE, title='Conversion Line')
@plot.line(color=color.RED, title='Base Line')
@plot.line(color=color.GREEN, title='Lagging Span')
@plot.line('ls_a', color=color.GREEN(0.6), title='Leading Span A')
@plot.line('ls_b', color=color.RED(0.6), title='Leading Span B')
@plot.fill('ls_a', 'ls_b', title='Background Up', color=color.GREEN(0.1))
@plot.fill('ls_a', 'ls_b', title='Background Down', color=color.RED(0.1))
def Main(self, conversion_periods, base_periods, lagging_span_2_periods, displacement):
    conversion_line = Donchian.new(conversion_periods)
    base_line = Donchian.new(base_periods)
    lead_line1 = mean(conversion_line, base_line)
    lead_line2 = Donchian.new(lagging_span_2_periods)[0]

    fill_up_color = None if lead_line1 > lead_line2 else color.TRANSPARENT
    fill_down_color = color.TRANSPARENT if lead_line1 > lead_line2 else None
    return (
        conversion_line[0],
        base_line[0],
        plot.Line(self.close[0], offset=-displacement + 1),
        plot.Line(lead_line1, offset=displacement - 1),
        plot.Line(lead_line2, offset=displacement - 1),
        plot.Fill(offset=displacement - 1, color=fill_up_color),
        plot.Fill(offset=displacement - 1, color=fill_down_color),
    )