When is the Ichimoku Cloud Breakout confirmed?

Tenkan-sen (9) crosses above Kijun-sen (26) on this candle (it was at or below it the candle before) and the close is above both cloud spans (Span A and Span B as plotted at this candle, i.e. computed 26 candles earlier). Buy at that close; exit at the first close below the Kijun. Paper traded on 1-hour and 4-hour candles with that exit and a protective stop inside the candle at the Kijun or 2 x ATR14 below the entry, whichever is lower; the encyclopedia backtest uses that stop, a target of two times the risk and a 100-candle limit. Tested in docs/research/2026-10-indicator-tests.md.

When is the Ichimoku Cloud Breakout invalid?

A close at or below the Kijun at the cross is not taken (it would exit at once), and a cross inside or below the cloud does not count.

Ichimoku Cloud Breakout

BullishContinuationAdvanced

Tenkan crosses above Kijun while price is above the cloud. Exit under the Kijun.

Verdict: CautionBitcoin 4H: 185 trades, won 40%, avg trade +0.8% vs random day +0.6%. Backtest

Cloud top52 candles

Ichimoku Cloud Breakout: textbook shape, step by step

Two lines: the Tenkan, the middle of the high and low of the last 9 candles, and the slower Kijun, the same over 26. The cloud is built from them and from a 52-candle midpoint, and drawn 26 candles ahead.

step 1/4

Trade rules

Direction	Long (buy)
Entry	Tenkan-sen (9) crosses above Kijun-sen (26) on this candle (it was at or below it the candle before) and the close is above both cloud spans (Span A and Span B as plotted at this candle, i.e. computed 26 candles earlier). Buy at that close; exit at the first close below the Kijun. Paper traded on 1-hour and 4-hour candles with that exit and a protective stop inside the candle at the Kijun or 2 x ATR14 below the entry, whichever is lower; the encyclopedia backtest uses that stop, a target of two times the risk and a 100-candle limit. Tested in docs/research/2026-10-indicator-tests.md.
Cancelled if	A close at or below the Kijun at the cross is not taken (it would exit at once), and a cross inside or below the cloud does not count.
Target	Two times the risk, projected from the breakout

4 common mistakes

Using the cloud drawn 26 candles ahead as if it were known. The cloud above today's candle was computed 26 candles ago; nothing in the rule looks into the future.
Calling it a strong buy. In our test it beat chance only on 1-hour candles, and that edge faded in 2024-2025.
Ignoring how rarely it trades. It was in a position 11-15% of the time and earned less per year than a Donchian breakout on every timeframe.
Changing 9/26/52 to fit crypto's 24/7 week and keeping the old results. The tested settings are the standard ones.

Backtest

same rules every time · equal size · no fees · method

Market	Trades	Won	Avg trade	Random day
Bitcoin · 4H · 2017-2026	185	40%	+0.81%	+0.57%
US large caps (50) · 1D · 2016-2026	1310	43%	+1.28%	+1.47%

Verdict: CautionBeat a random entry in some markets, not in others.

pattern +150%random +106%

Bitcoin 4H: pattern +150% vs random day +106% over 185 trades

pattern +1677%random +1922%

US large caps (50) 1D: pattern +1677% vs random day +1922% over 1310 trades

Real examples

Bitcoin · 4H

Breakout Jun 3, 2024, exit Jun 5, 2024 (target)+4.00%

52 candles68,930 · May 25, 2024Top of the cloud68,894 · Jun 3, 2024Kijun: exit line68,085 · Jun 3, 2024TK cross above the cloud

Bitcoin 4H, real candles from May 25, 2024

Goldman Sachs · 1D

Breakout Oct 26, 2022, exit Nov 11, 2022 (target)+13.39%

52 candles353.82 · Aug 12, 2022Top of the cloud335.64 · Oct 26, 2022Kijun: exit line313.21 · Oct 26, 2022TK cross above the cloud

Goldman Sachs 1D, real candles from Aug 12, 2022

Disney · 1D

trapBreakout Oct 17, 2023, exit Oct 23, 2023 (stop)−4.28%

52 candles85.49 · Aug 3, 2023Top of the cloud86.14 · Oct 17, 2023Kijun: exit line82.51 · Oct 17, 2023TK cross above the cloud

Disney 1D, real candles from Aug 3, 2023