Bitcoin’s price action is currently hitting hard resistance from the Ichimoku Cloud, one of the most popular technical analysis indicators. This resistance is painting an ugly risk-reward picture for bullish speculators, indicating possible headwinds to any additional upward price action. The Ichimoku Cloud is proving to be an important level to watch for anyone trading the cryptocurrency.
A Japanese financial journalist invented the Ichimoku Cloud back in the 1960’s. Such a tool is invaluable in giving a full picture of market momentum, including areas of support and resistance. The indicator comprises five lines: Leading Span A, Leading Span B, Conversion Line or Tenkan-Sen (T), Base Line or Kijun-Sen (K) and a lagging closing price line. This very simple space between Leading Span A and B is what makes the cloud itself.
The top and bottom of the Ichimoku Cloud Indicator frequently serve as future support and resistance levels. The bottom edge of the Ichimoku Cloud is now sitting around $85,000. At the same time, the recent price action in Bitcoin is now putting this important threshold to the test. All of this has resulted in a very difficult market for buyers.
For instance, a rejection at the Ichimoku Cloud on April 2 well ahead of a major sell-off that ultimately sent Bitcoin crashing below $75,000. A similar pattern developed following the Ichimoku Cloud rejection on February 21 at $43,660. This event highlighted the indicator’s significance as a major resistance level. These historical instances highlight the relevance of the Ichimoku Cloud in predicting future price actions.
One indicator that has gained tremendous popularity among cryptocurrency traders is the Ichimoku Cloud. It provides traders with useful information about where support and resistance may lie. Bitcoin price is at a critical BTC resistance area. Market participants are best served by watching ES closely as its price action plays out vs the Ichimoku Cloud to forecast its next playing direction.
