by Jamie Holmes
Buyers are within reach of their initial target of $422.98 with BTC-USD up 2.71% on the BitStamp exchange so far today. The price of Bitcoin at the time of writing is $418.54 and the market could be preparing for a move down before continuing the upward momentum. The Federal Reserve minutes recently showed calls for slower and smaller interest rate increases which has fuelled risk-off sentiment in global markets; other commodities such as oil and gold are also posting gains today.
The long-term outlook is shown below with the daily price action on the BitStamp exchange. The price action has broken above resistance provided by the Ichimoku cloud around the $400 handle and looks to be closing above the cloud today. This will give a bullish signal with the market very close to the fractal resistance at $422.98 which is the first target for buyers. Therefore we could see some pullback before the market moves higher towards $436.00 and $465.00. A break above $465.00 will open up the psychological $500 level again.
Bullish momentum is indicated by the relative positions of the conversion and base lines. The conversion line has moved above the base line after trending below it. Also, both have started to trend upward, suggesting the market is gearing up for further upward moves over the long-term. Further confirmation will be given when the Ichimoku cloud changes colour to green and when the lagging line moves above the Ichimoku cloud.
A bearish long-term outlook is only validated if there is a daily close below the conversion line currently at $395.11. Also, the most recent fractal support level is at $369.12, suggesting a strong upward movement over the past few weeks. Ichimoku analysis suggests there is a high probability that this trend will strengthen going forward. The Ichimoku cloud area should now provide support going forward around the $400-$396 area for the next few weeks.
A further bullish indication over the long-term has been given by the lagging line today which has moved from below to above the previous price action, which is level with the green dotted line. Bullish momentum is signalled by the relative strength index which is trending higher and comfortably above the 50 equilibrium level. When the market is overbought, i.e. when the index is above 70, then it is best to exit long positions and possibly enter into short positions in BTC-USD.
The daily chart already indicates that buyers may want to wait for a return to the $400 levels before buying into the emerging upward trend. The short-term outlook illustrated below shows the hourly price action on the BitStamp exchange along with the Ichimoku indicator, fractal levels and relative strength index. The chart below shows that the market is testing support provided by the conversion line at $418. An hourly close below the conversion line will see the market tend toward fractal supports at $415.22 and $411.49. A break of these levels will see a test of support provided by the Ichimoku cloud.
On the other hand, further bullish dominance will be seen with a break above the recent high of $421.11. However, the market looks more likely to make a short-term downward move before continuing upward, as the relative strength index is trending downward and moving out of the overbought zone, suggesting a return to the cloud around $405-$407 for 12:00 GMT Thursday. The cloud should then provide support and see the market move higher towards $465.