Bitcoin Bulls Reclaim Cloud But Stormy Days Still Ahead
Bitcoin price is struggling to hold above $40,000 and is now below it. On the three-day timeframe, the top cryptocurrency is also well back within the Ichimoku cloud, suggesting there’s more support now built below.
However, it is worth noting that if the indicator is to be read correctly, even through there’s an attempt at a recovery underway, stormy days are still ahead for crypto bulls hoping for a rebound right back into the previous rally.
Bitcoin Price Recovers Cloud, But A Storm Could Be Brewing
Bitcoin price action has been confusing as of late, locked in a tight trading range. The leading cryptocurrency by market cap is no longer in the low $30,000s, or at as much risk of a plunge below the now crucial support level.
Related Reading | Why Bitcoin Could Slingshot Back To Lows Before Gaining Momentum
From $30,000 to $40,000 is a full 25% recovery, however, thus far the once trending asset has lacked the same upside strength as the start to this year. Negative sentiment has kept prices at bay, and although there’s been a recent recover, that all could soon change.
A naked look at the Ichimoku shows BTC back in the cloud | Source: BTCUSD on TradingView.com
The top cryptocurrency has bounced back into the three-day cloud on the Ichimoku indicator, a sign that so far support is working. Bitcoin price has also recovered above the Tenkan-Sen, also called the conversion line.
This is a fast moving line that when above the baseline suggests the market is bullish and when below it, bearish. Currently there’s a bearish crossover following the deep 50% plummet in May. Price action also might have made it back into the cloud, but the cloud itself is also turning red after a “kumo” twist.
What The Ichimoku Really Says “At A Glance”
A twist in the kumo or cloud is always significant and is a tell the trend has changed. The Ichimoku is also a diverse tool that considers not just price, but time itself.
The Chikou span or lagging span, shows support and resistance and is plotted backward several trading sessions. Running resistance and support across what the span suggests gives the primary levels that Bitcoin must hold or break for a larger move.
The same chart, but with more detailed analysis included | Source: BTCUSD on TradingView.com
Using time analysis, Bitcoin spent a similar time topping out its bullish impulse before turning back bearish. Most corrections during a primary uptrend play out as ABC corrections according to Elliott Wave Theory. A comparable amount of time was spent bottoming right after as was spent during the topping process, and Bitcoin began its new uptrend – however COVID had other plans.
Related Reading | What The Last Leg Up In The Crypto Bull Market Could Look Like
After another phase of consolidation, Bitcoin recovered the long term uptrend support line, and could soon retest it. The Ichimoku currently supports the theory.
Back in late 2019 there was a bearish kumo twist much like there was just days ago. Support and resistance, and even time itself all match up well. There’s also a crossover of the Tenkan-Sen and Kijun-Sen, which suggests price action is currently leaning bearish on the three-day timeframe.
Featured image from iStockPhotos, Charts from TradingView.com