Bitcoin appears to have turned the corner and could continue to gain ground in the near term, Fairlead Strategies said, citing a widely-tracked technical tool called Ichimoku cloud.
"Bitcoin has cleared resistance defined by the daily cloud, and it is likely to confirm its breakout upon today's close," Katie Stockton, founder and managing partner of Fairlead Strategies, told CoinDesk in an email on Wednesday. While bitcoin traded slightly weak on Wednesday, it managed to print a UTC close above the cloud, confirming a bullish trend change.
"The breakout reverses the intermediate-term downtrend and puts the next major hurdle on the chart in the $50,000-$51,000 area based on the 200-day moving average (MA) and a 50% retracement level," Stockton added.
Created by Japanese journalist Goichi Hosoda in the late 1960s, the Ichimoku cloud comprises two lines – the leading span A and the leading span B. Both lines are plotted 26 days ahead of the last candle to indicate future support or resistance.
The indicator uses a somewhat complex formula to plot these lines. However, users don't need to know the inner workings, which are taken care of by chart providers, and can focus on interpreting the signals given by the indicator.
The cloud turns green, signaling a bullish bias when the leading span A crosses above the leading span B. The cloud color changes to red whenever the leading span B drops under the leading span A.
Crossovers above or below the cloud are widely taken to represent early signs of a bullish or bearish trend change.
The 200-day moving average (MA) and Fibonacci retracement are widely used to identify long-term trends and potential support and resistance levels.
The latest breakout is backed by an above zero or bullish reading on the MACD histogram. "Our short-term gauges are pointing higher," Stockton noted.
So far, the follow-through to the breakout has been dismal, with the cryptocurrency trading 1% lower on the day at $43,400. The daily chart stochastic is close to flashing an overbought signal, indicating potential for temporary consolidation before a continued move higher.
"Risk is heightened in this environment, so we would keep a tight stop loss for all cryptocurrency positions," Stockton said, adding that the daily cloud can now offer support.
Bitcoin has rallied over 25% since hitting lows under $34,500 a week ago, supposedly on the back of increased demand from Russia and Ukraine.
According to the latest reports, Russians have taken control of the Ukrainian port city of Kherson and a Ukrainian delegation is on the way to Belarus for the second round of ceasefire talks with their Russian counterparts.
All writers’ opinions are their own and do not constitute financial advice in any way whatsoever. Nothing published by CoinDesk constitutes an investment recommendation, nor should any data or Content published by CoinDesk be relied upon for any investment activities. CoinDesk strongly recommends that you perform your own independent research and/or speak with a qualified investment professional before making any financial decisions.
Recommended Content
Editors’ Picks
Is Altcoin Season here as Bitcoin reaches a new all-time high?
Bitcoin reaches a new all-time high of $98,384 on Thursday, with altcoins following the suit. Reports highlight that the recent surge in altcoins was fueled by the victory of crypto-friendly candidate Donal Trump in the US presidential election.
Shanghai court confirms legal recognition of crypto ownership
A Shanghai court has confirmed that owning digital assets, including Bitcoin, is legal under Chinese law. Judge Sun Jie of the Shanghai Songjiang People’s Court shared this opinion through the WeChat account of the Shanghai High People’s Court.
BTC hits an all-time high above $97,850, inches away from the $100K mark
Bitcoin hit a new all-time high of $97,852 on Thursday, and the technical outlook suggests a possible continuation of the rally to $100,000. BTC futures have surged past the $100,000 price mark on Deribit, and Lookonchain data shows whales are accumulating.
Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange
Shiba Inu trades slightly higher, around $0.000024, on Thursday after declining more than 5% the previous week. SHIB’s on-chain metrics project a bullish outlook as holders accumulate recent dips, and dormant wallets are on the move, all pointing to a recovery in the cards.
Bitcoin: New high of $100K or correction to $78K?
Bitcoin surged to a new all-time high of $93,265 in the first half of the week, followed by a slight decline in the latter half. Reports highlight that Bitcoin’s current level is still not overvalued and could target levels above $100,000 in the coming weeks.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.