Bitcoin price is struggling to stay above $ 40,000 and is now below it. In the three-day period, the top cryptocurrency is also far back in the Ichimoku cloud, suggesting that more support is now being built down below.
It is worth noting, however, that crypto bulls hoping for a rebound straight into the previous rally still have stormy days ahead of them if the indicator is to be read correctly, even if an attempt at rebound is underway.
Bitcoin Price Recovers From Cloud But Storm May Be Brewing
Bitcoin price action has been confusing lately and locked in a tight trading range. The leading cryptocurrency by market capitalization is no longer below the low $ 30,000 or is so much at risk of falling below the now critical support level.
Related reading | Why Bitcoin could bounce back to lows before it gains momentum
From $ 30,000 to $ 40,000 is a full 25% recovery, however, the once-trending asset has so far lacked the same upward strength as it did earlier this year. Negative sentiment has kept prices in check and although there has been a recovery recently, things could change soon.
A naked look at the Ichimoku shows BTC in the cloud again | Source: BTCUSD on TradingView.com
The top cryptocurrency has jumped back into the three-day cloud on the Ichimoku indicator, a sign that the support so far is working. Bitcoin price has also rallied above the Tenkan-Sen, also known as the conversion line.
This is a fast moving line that when above the baseline indicates that the market is bullish and when below it is bearish. There is currently a bearish crossover following the deep 50% drop in May. The price movement could have made it back into the cloud, but the cloud itself will also turn red after a “kumo” spin.
What the Ichimoku Really Says “at a Glance”
A twist in kumo or in the cloud always matters and indicates that the trend has changed. The Ichimoku is also a versatile tool that takes into account not only price but time itself.
The chikou range, or the trailing range, shows support and resistance and is drawn backwards for several trading sessions. Ongoing resistance and support above what the range suggests indicate the primary levels that Bitcoin must hold or break for any major move.
The same chart, but with more detailed analysis included | Source: BTCUSD on TradingView.com
With the help of time analysis, Bitcoin spent a similar amount of time outperforming its bullish impulse before turning bearish again. Most of the corrections during a primary uptrend play out as ABC corrections according to Elliott Wave Theory. Immediately thereafter, a comparable amount of time was spent bottoming out as it was during the topping process, and Bitcoin started its new uptrend – however, COVID had other plans.
Related reading | What the last leg in the crypto bull market could look like
After another period of consolidation, Bitcoin has regained the long-term support line of the uptrend and could test it again soon. The Ichimoku currently supports the theory.
At the end of 2019 there was a bearish kumo twist, similar to a few days ago. Support and resistance, and even time itself, go well together. There is also a cross between Tenkan-Sen and Kijun-Sen, suggesting that price action is currently trending bearish on the three-day timeframe.
Featured image from iStockPhotos, Charts from TradingView.com