What Is the Ichimoku Cloud Break Strategy

A close that comes out of the cloud

The Ichimoku cloud break strategy is built on the cloud and one close. The cloud is a band between two lines drawn from the midpoints of past highs and lows and pushed twenty-six days forward, so the cloud under any day was drawn from bars a month or more before. The close is either under it, inside it, or above it. Take the Nasdaq in May 2025. On 8 and 9 May the close was inside the band. On 12 May it closed at 20868.25, 532.88 above the cloud's top — the first close above the cloud since 24 February. A close that comes out of the cloud is what the strategy watches for.

An aeroplane climbing out of cloud

Picture an aeroplane climbing through a cloud. Under the cloud is one kind of weather, on top of it in clear air is another, and inside it there is nothing to see at all. The Ichimoku cloud is a band with a top and a bottom, and the strategy reads which side of it the close is on — under, in, or above — and watches for the day that changes. Inside the cloud there is nothing to read, and the strategy waits. The cue is the day the close comes out of it, above or below, and which way it comes out is which way the strategy is looking.

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