What is Ichimoku Cloud: Definition & Meaning Explained

Definition of Ichimoku Cloud

Ichimoku Cloud is a group of technical indicators that’s used to understand trends, momentum, support, and resistance by calculating averages. Furthermore, the Ichimoku Cloud indicator is made up of two components:

TenkanSen: The short-term indicator
KijunSen: The long-term indicator

There’s a cloud that’s formed as a result of plotting the averages and using the components on a chart. One glance at this cloud can tell you multiple things like:

Uptrend: If the price is above the cloud
Downtrend: If the price is below the cloud
Neutral: If the price is in the cloud

Moreover, if the cloud and the price are moving in the same direction, there’s much more confidence in the trend that’s forming. In fact, it’s a trading signal.

Equity Market

The Equity Market is a place where shares are traded, money is raised, and stock is offered to investors. That's why it is divided into two categories:

Primary Market: An equity market where shares are offered to investors for the first time through IPOs while fundraising also happens through private placements.
Secondary Market: An equity market where shares, bonds, futures, options, more are traded

The primary market is typically over the counter but may be regulated in the case of exchange traded IPOs. The secondary market is often well-regulated as most securities listed are exchange traded.

Interest Coverage Ratio

Interest Coverage Ratio (ICR) is used to determine the likelihood of a company’s ability to pay interest on existing outstanding debt. A low ICR typically indicates that a company is less likely to pay interest.

In fact, it indicates that the company may be heading towards bankruptcy. A higher ICR means that a company’s financial health is solid and more than likely to pay interest on existing outstanding debt.

Abandoned Baby Pattern

An Abandoned Baby Pattern is a type of candlestick pattern that signals the reversal of a bullish or bearish trend. It is made up of three candles, each of which varies based on the trend.

Bullish Abandoned Baby Pattern

Candle #1: Red in color & forms during a downward trend
Candle #2: Forms a Doji Star below Candle #1’s closing price
Candle #3: Leads to a bullish trend & forms above the Doji Star (similar size to Candle #1)

Bearish Abandoned Baby Pattern

Candle #1: Green in color & forms during an upward trend
Candle #2: Forms a Doji Star above Candle #1’s closing price
Candle #3: Leads to a bearish trend & forms below the Doji Star (similar size to Candle #1)

Income Statement

An income statement of a company is a document that displays crucial financial information like profit, loss, revenue, expenses, taxes, and more. Income statements are logically divided and published in monthly or quarterly manner for better accounting and financial modelling. A combination of these statements is what you see as the quarterly or annual report published by publicly listed companies.

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Ichimoku Cloud