The shaded area between the two senkou spans, used as a zone of support and resistance and as a visual trend filter.
Price above the cloud is treated as an uptrend, below it as a downtrend, and inside it as unresolved. A thick cloud is read as a stronger barrier because it reflects a wide historical range; a thin cloud is easier to cross.
Its main practical value is as a filter. Requiring long trades only while price is above the cloud removes a large share of counter-trend attempts, in the same spirit as any longer-term trend filter.
The cloud is built from midpoints of past ranges and projected forward, so its apparent predictive shape is a display convention. It is a picture of where the market has recently been balanced, which is useful, rather than a forecast of where it will react.
Original diagrams for the ideas on this page. Illustrative, not real market data.
Support, resistance and the flip. Support is a price where buyers keep stepping in and the fall stops; resistance is a price where sellers keep stepping in and the rise stops. Once price closes above an old ceiling, that same level often acts as the new floor.How a trend is built. A trend is just a sequence of turning points. While each peak and each dip sits above the one before it the market is trending up; once both start landing below the previous ones the structure has turned down.
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