by Jamie Holmes
BTC-USD starts the week with a bang, up around seven percent on the opening price for March 27, breaking the psychological $1000 handle. Following concerns over the Bitcoin blockchain splitting, negative sentiment pushed BTC-USD to a low at $891.33 on March 25 but now the market eyes the critical $1100 handle.
The daily price action on the Bitstamp exchange is displayed below. The market managed to break below the $900 handle but has since retreated moving higher. Notice that on March 25, a bullish hammer candlestick was formed, giving the first indication that the downward trend is over. Similarly, a close higher than the conversion line on March 27, that is higher than $1004.61, and this will confirm the reversal and point a more gains for BTC-USD.
Also, we see that the lagging line (purple) has found support around the Ichimoku cloud and has not yet confirmed a downward trend, as the lagging line remains above the Ichimoku cloud. Therefore, we expect the market to tend toward resistance provided by the base line at $1120.66.
However, momentum remains bearish, as signaled by the Awesome Oscillator, which remains in negative territory and red in color, and by the base line, which is higher than the conversion line. Therefore, a close higher than $1004.61 on March 27 will only give a moderate bullish signal as the price remains within the Ichimoku cloud and likely that bulls will run out of steam near the base line, that is $1120.66, or the psychological $1100 level.
Also, the market returning to equilibrium indicates that a breakout in either direction is possible. Therefore, we look to place limit sell orders just below the Ichimoku cloud, around $991.17 and limit buy orders just above the Ichimoku cloud, that is $1113.18. A break below $991.17 will open up the recent low at $891.33, whereas a bullish Kumo breakout will see the market attempt to test fractal resistance at $1260.
The 13-hour price action below illustrates how bears have gained control over the medium term. While the price is below the Ichimoku cloud, a weak bullish signal was given on March 27, when the market closed above the conversion line. The next resistance to be targeted by bulls will be around the base line at $1075.66. A break of this level will open up the resistance provided by the Ichimoku cooud around $1162.50.
Notice that the price action is below the Ichimoku cloud as well as the lagging line. The Ichimoku cloud is very thin up until April 1, indicating a weak resistance zone around $1162.50. Consequently, if BTC-USD bulls manage to move the market above the base line and above the Ichimoku cloud, we should see the market tend toward the recent fractal resistance at $1260.00.
Notice that the Awesome Oscillator is telling us that bears are becoming exhausted, as the bars are moving higher and have changed color to green. Therefore, we should look to buy at the high of the previous candle at $1012.98 with a target of $1162.50. Also, when examining the Awesome Oscillator, we see a two troughs, which give an indication that bullish momentum will soon dominate.
The 4-hour price action is illustrated below and shows that sellers may cut the market short of any further gains around the $1048 to $1100 zone, as indicated by the thick, red Ichimoku cloud. Therefore, for a sustained uptrend to continue, we require the market to remain above $1102 and confirm a bullish Ichimoku cloud breakout. On the other hand, the Ichimoku cloud may be an optimal place to enter a short position for BTC-USD, with a target of the recent low near $900.
The Awesome Oscillator indicates that momentum has shifted in favor of bulls in the market. The oscillator has moved across the zero threshold and is green in color. Therefore, we look to enter long positions once the current 4-hour candlestick closes, with an entry just above the high of this candlestick, with a target of $1102.
On the other hand, a close below the conversion line will point to a downward move for BTC-USD and acts as a good stop loss for any buy positions. The conversion line currently stands at $984.76.