We can identify the price action causes of why price is finding it difficult to move higher by analyzing longer timeframes with the Ichimoku Kinko Hyo system.
Bitcoin’s Monthly Ichimoku Charting
BTC Monthly Ichimoku Chart
Bitcoin’s monthly chart is totally void of a single, thick Kumo. While this would be an anomaly in any other market, but Bitcoin it is not. Mostly because of how new Bitcoin still is (10 years is just a blink) and it has yet to find true equilibrium. The result of Bitcoins massive growth is a near non-existent history of any substantial Kumo. And it appears that this type of trend will continue. But Bitcoin is up against an extremely important and powerful resistance zone on the monthly chart: The Kijun-Sen (Base Line). You can think of the Kijun-Sen as a kind of dynamic 50% Fibonacci level. In other words, if price is trading near the Kijun-Sen, then there is a balance. For the past three months (that is including August of 2019), Bitcoin has been trading against the monthly Kijun-Sen – above and below. The Kijun-Sen is a naturally difficult place for prices to breach, so it is no surprise that we are seeing Bitcoin struggle to break higher here. The difficulty is exacerbated by the fact that the Kijun-Sen is also flat. And it has remained in this flat going back to where it started back in December of 2017! In fact, the first test of breaking above the monthly Kijun-Sen occurred in June of 2019 – what was 13 months from the prior test above the Kijun-Sen. We should not be surprised to see such resistance here, but we also shouldn’t be surprised to see price unexpectedly pop higher. There are three consecutive monthly wicks shooting above the monthly Kijun-Sen. That’s a pretty damn strong hint that things are moving up.
Bitcoin’s Weekly Ichimoku Charting
BTC Weekly Ichimoku Chart
Bitcoin’s weekly Ichimoku chart shows another clear reason of why price has stalled out and this is best displayed by the behavior of my favorite component in the Ichimoku System: the Chikou Span. First, I should point out that there are some extremely bullish indicators on the weekly chart: price is above the Kumo, price above the Kijun-Sen and the future Senkou Span A is above Senkou Span B. The reason price has found a stopping point here is the Chikou Span. Many people do not understand how this component works or how to interpret it. It is literally the current price action thrust back 26 periods. It’s like a shadow or a mirror – it represents the market's memory. One of the most unexplainable behaviors of the Chikou Span is that it will respond to support and resistance just like price does. That is a fact and behavior of the Chikou Span that many traders neglect are don’t know. If you look at the Chikou Span and where it is presently trading, it’s trading up against the top of the Kumo (Senkou Span B). Senkou Span B is the hardest single area of resistance that price will face on an Ichimoku chart. And given that this resistance level can hold for quite a period of time, then we could see Bitcoin easily remaining contained inside the Kumo until January of 2020. The clear breakout zone higher here on the weekly chart would be for the Chikou Span to move and close above the Kumo, preferably around the $14,000 value area.
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