/Bitcoin Monthly Closes Above The Clouds For First Time Since 2016

Bitcoin Monthly Closes Above The Clouds For First Time Since 2016

Last night, Bitcoin closed out August and opened September with a new candle. At the same time, the leading cryptocurrency by market cap also closed its first monthly candle above the Ichimoku cloud since 2016.

That year, BTCUSD closed above the key level twice, unable to hold the first time around. On the second, successful attempt, the crypto asset rose more than 1500% over the next 12 months. Will Bitcoin hold and head off on a new uptrend, or is another retest of support necessary for the cryptocurrency to hold above the key level?

Ichimoku Provides Clear Perspective On Current Bitcoin Price Action, Pivotal Moment Ahead

Bitcoin price closed the August 2020 monthly candle at the highest point since the peak of the 2017 bull run. That pivotal monthly close in December 2017 at roughly $13,800 is the final resistance level before new highs, according to the Ichimoku indicator.

The indicator’s Chikou span is projected 26 sessions backward and shows where support and resistance lies (red dotted lines). The peak of the Chikou span marks the same monthly close.

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After Bitcoin took out that key resistance level during its last market cycle, it was off to the races, and the asset barely corrected from there on out. But before the cryptocurrency blasted above the crucial level, it first closed and held above the Ichimoku cloud or Kumo on monthly timeframes.

In the first attempt, the cryptocurrency closed – but couldn’t hold – above the Kumo on monthly timeframes.

The Kumo consists of both the Senkou span A and Senkout span B, which each act as resistance and support. Additionally, when these lines cross, it can give a powerful buy or sell signal.

bitcoin btcusd ichimoku cloud kumobitcoin btcusd ichimoku cloud kumo

BTCUSD Monthly Ichimoku Cloud 2016 - 2020 Comparison | Source: TradingView

Markets are considered bullish of the Senkou Span A is above the B span. On monthly timeframes, BTCUSD isn’t quite there yet. The B span is still higher, with about a $500 difference between them.

After Bitcoin lost the Ichimoku cloud on monthly timeframes back in 2016, the leading crypto asset fell sharply to the Senkou span B where nothing but a wick was left behind.

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Bulls stepped in to buy the dip with ferocity, propelling the cryptocurrency back above the cloud, through resistance, and soaring toward a new all-time high.

Conditions are slightly different this time around. During the last cycle, Bitcoin was considered bullish by the Senkou span crossover prior to the first attempt at holding above the Kumo.

The failure took the cryptocurrency down to the B span, which if happens again, would suggest a correction to $8,500. There, if history plays out the same, bulls would buy up the last major dip ever, and ride the position to a new record.

The Ichimoku indicator was created by Japanese journalist Goichi Hosoda. Ichimoku Kinko Hyo loosely translates to one glance equilibrium chart according to Wikipedia, due to how many different signals it can provide at just “one glance.”

This one glance look at Bitcoin shows a pivotal moment ahead, and one that could lead to either the last retest ever, or new highs. But which is it?

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