Recently, many people have been discussing the Ichimoku Cloud indicator; it is indeed a quite interesting technical analysis tool. I have also used it myself, so I’d like to share some insights.

First, let’s look at the current market situation. NOT is currently around $0.00, with a 24-hour increase of 0.20%. BTC is performing well, surpassing $78.14K, up 2.35%. ETH also rose, with the price at $2.29K, up 1.52%.

Back to the Ichimoku Cloud, this indicator actually originated in Japan, and its name means “one glance to see everything clearly.” Unlike other indicators that focus on a single aspect, it combines multiple signals, allowing you to understand the market more comprehensively.

The core components of this indicator include four parts. The Conversion Line is the average of the highest high and lowest low over the past 9 periods, used to judge short-term trends. The Base Line looks at data over 26 periods to help identify support and resistance. The Kumo, or Cloud, is the most visual part, divided into two lines; when the price is above the cloud, the trend is upward, and below it, downward. The Chikou Span is the current closing price shifted back 26 periods, used to confirm the trend.

When using the Ichimoku Cloud, I usually look at three signals. A buy opportunity occurs when the Conversion Line crosses above the Base Line, preferably with the price also above the cloud. Conversely, a sell signal is when the Conversion Line crosses below the Base Line. The thickness of the cloud is also important; a thicker cloud indicates stronger support or resistance, helping you judge key price levels.

Honestly, the advantage of the Ichimoku Cloud is that it consolidates a lot of information into one chart, providing a more complete market picture, especially useful for identifying support and resistance and determining trend direction. But it also has obvious drawbacks, as it involves many components, which can be a bit complex for beginners. Additionally, in markets with very low volatility or very short-term movements, this indicator’s effectiveness diminishes.

Recently, with the bullish momentum of BTC and ETH, analyzing with the Ichimoku Cloud can be clearer. When the price is above the cloud, it generally confirms a short-term upward trend. Of course, no indicator is 100% accurate, including the Ichimoku Cloud, so it’s best to consider other factors as well. If you’re interested, you can try it on Gate, add this indicator to your chart, and see how it works for yourself.