# Ichimoku Kinko Hyo: Understanding Its 5 Key Components

## What Is the Ichimoku Kinko Hyo?

The Ichimoku Kinko Hyo is a comprehensive [technical indicator](https://www.investopedia.com/terms/t/technicalindicator.asp) used to gauge market [momentum](https://www.investopedia.com/terms/m/momentum.asp) and predict support/resistance areas. It was developed by a Japanese journalist to assess market trends quickly and its five core components are Tenkan-sen, Kijun-sen, Senkou Span A, Senkou Span B, and Chikou span. Despite its all-in-one capability, it's most valuable when used with other technical indicators.

### Key Takeaways

*   Ichimoku Kinko Hyo is a comprehensive technical indicator used by traders to assess market momentum and predict future areas of support and resistance, summarizing multiple strategies into one look.
*   The Ichimoku indicator consists of five key components: Tenkan-sen, Kijun-sen, Senkou Span A, Senkou Span B, and Chikou Span, each providing significant insights into market conditions.
*   Although it may appear complex to beginners, understanding the function of each line in the Ichimoku indicator can simplify its interpretation and enhance its usability.
*   The Ichimoku cloud, formed by Senkou Span A and Senkou Span B, is a highlighted area on the chart that identifies vital support and resistance levels, offering signals for potential trend reversals.
*   While the Ichimoku Kinko Hyo aims to be a standalone indicator, it is most effective when used in combination with other technical analysis tools to confirm trading signals.

![](https://www.investopedia.com/thmb/kX7GyQFxOlZk8i6xXC7ivV2w5-c=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/IchimokuKinkoHyo-5c54a012c9e77c0001a406ff.png)

*TradingView.*

## How to Interpret the Ichimoku Kinko Hyo Indicator

The Ichimoku Kinko Hyo indicator was created by a Japanese newspaper writer to combine different technical strategies into one easy-to-use tool. In Japanese, "ichimoku" translates to "one look," meaning traders only have to take one look at the chart to determine momentum, [support](https://www.investopedia.com/terms/s/support.asp), and [resistance](https://www.investopedia.com/terms/r/resistance.asp).

Ichimoku might seem complex to new [traders](https://www.investopedia.com/terms/t/trader.asp), but once they understand the lines their apprehension usually disappears and they discover that it's easy to use.

Even though the Ichimoku indicator is designed to be all-in-one, it's best used with other [technical analysis](https://www.investopedia.com/terms/t/technicalanalysis.asp) tools.

## Analyzing Ichimoku Kinko Hyo Components

The Ichimoku indicator has five main parts:

*   **Tenkan-sen:** The [tenkan-sen](https://www.investopedia.com/terms/t/tenkansen.asp), or conversion line, is calculated by adding the highest high and the lowest low over the past nine periods and then dividing the result by two. This line shows key support and resistance levels and signals potential [reversals](https://www.investopedia.com/terms/r/reversal.asp).
*   **Kijun-sen:** The [kijun-sen](https://www.investopedia.com/terms/k/kijunsen.asp), or base line, is calculated by adding the highest high and the lowest low over the past 26 periods and dividing the result by two. This [line](https://www.investopedia.com/terms/k/kijun-line.asp) shows support and resistance, confirms trend changes, and can be a trailing [stop-loss](https://www.investopedia.com/terms/s/stop-lossorder.asp).
*   **Senkou Span A:** The [senkou span A](https://www.investopedia.com/terms/s/senkouspana.asp), or leading span A, is calculated by adding the tenkan-sen and the kijun-sen, dividing the result by two, and then plotting the result 26 periods ahead. This line forms one side of the kumo, or cloud, which indicates future support and resistance.
*   **Senkou Span B:** The [senkou span B](https://www.investopedia.com/terms/s/senkouspanb.asp), or leading span B, is calculated by adding the highest high and the lowest low over the past 52 periods, dividing it by two, and then plotting the result 26 periods ahead. The resulting line forms the other edge of the kumo that's used to identify future areas of support and resistance.
*   **Chikou Span:** The [chikou span](https://www.investopedia.com/terms/c/chikouspan.asp), or lagging span, is the current period's closing price plotted 26 days back on the chart. This line is used to show possible areas of support and resistance.

## Visualize Ichimoku Kinko Hyo With a Sample Chart

The following is an example of an Ichimoku indicator plotted on a chart:

![Image](https://www.investopedia.com/thmb/gKh9c-xfbINZFmj0tSFncmJ79dY=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/dotdash_Final_Ichimoku_Kinko_Hyo_Nov_2020-01-f1571f460af6485b93bc6f787e8df2bd.jpg)

**

In this example, the [Ichimoku cloud](https://www.investopedia.com/terms/i/ichimoku-cloud.asp) is the area that's shaded in orange, which represents a key area of support and resistance. The chart shows that the SPDR S&P 500 ETF remains in a bullish [uptrend](https://www.investopedia.com/terms/u/uptrend.asp) since the current price is trading above the cloud. If the price were to enter the cloud, traders would watch for a potential reversal of the trend.

## The Bottom Line

The Ichimoku Kinko Hyo is a five-line trend system that can help traders and investors to quickly assess market momentum and identify future support and resistance levels. Though its five components may cause apprehension among some users at first, understanding the Ichimoku's Tenkan-sen, Kijun-sen, Senkou Span A, Senkou Span B, and Chikou Span can assist their trend analysis and play a role in their trade decision-making. The Ichimoku is most valuable when used with other technical indicators.