In trading, identifying the optimal entry point often constitutes a significant portion of the challenge, as timing and price levels greatly impact success by favorably altering the risk-reward ratio for traders.
Although the short-term outlook for bitcoin (BTC) appears promising with a surge in demand for bullish positions in the options market, the cryptocurrency’s closeness to critical resistance levels—ones that have limited upside potential in recent months—indicates that the risk-reward scenario for those aiming to profit from bullish conditions may be less appealing.
Since Saturday, BTC has been testing the lower limit of the Ichimoku cloud, which is positioned around $85K. Created by a Japanese journalist in the 1960s, the Ichimoku cloud serves as a technical analysis tool that provides an all-encompassing perspective on market momentum, along with support and resistance levels.
This indicator is made up of five lines: Leading Span A, Leading Span B, the Conversion Line or Tenkan-Sen (T), the Base Line or Kijun-Sen (K), and a lagging closing price line.
The gap between Leading Span A and B forms the Ichimoku Cloud, with its upper and lower edges indicating potential support and resistance levels based on the price’s location relative to the cloud. When trading occurs above the cloud, it signifies a bullish trend, whereas trading below suggests a bearish trend.
In early February, BTC dipped below $100K, trading beneath the Ichimoku Cloud. Since that time, the cloud’s lower edge has acted as a robust resistance and supply zone, inhibiting recovery attempts.
As BTC approaches this level again, bullish traders, particularly those interested in placing new orders, should exercise caution. The immediate upside may be constrained by resistance from the cloud near $85K, while support is available below at around $75K, roughly $10K lower than the current market price. This context creates a notably less enticing risk-reward ratio for long positions.
The rebound at the Ichimoku Cloud on April 2 led to a significant sell-off, driving BTC down below $75K, reflecting a comparable trend observed after the rejection on February 21.
As a result, the current interaction with cloud resistance requires careful observation for signs of renewed selling pressure. A drop from this resistance point would refocus attention on the $75K threshold.
However, should the price manage to break through $90K, signaling a definitive breakout above the cloud, it would indicate a return to a broader bull trend and potentially a drive towards peak values.