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.
BTCUSD Monthly Ichimoku Cloud 2016 - 2020 Comparison | Source: TradingView
Markets are considered bullish of the Senkou Span A is