Price and time structures hinting at a Christmas rally, but key price levels must be maintained.

 

The Kumo Twist

Bitcoin (BTC) 4-hour Chart

Bitcoin (BTC) 4-hour Chart

One of the phenomena of the Ichimoku Kinko Hyo system is the Kumo Twist. The Kumo Twist is where Senkou Span A crossed Senkou Span B. Many Ichimoku authors and experts have identified this condition as an important one as it can delineate a specific time when trends seem to change. The level is even more critical if price is trading near the twist itself. From a price action perspective, the exact position of a Kumo Twist is the weakest level of the Cloud. Prices can move above or below the Kumo Twist with extreme ease. The 4-hour chart above shows where Bitcoin is/was trading during the New York late morning, early afternoon (1100 – 1500 EST). It’s an extremely precarious condition and a critical zone. This area is of extreme importance, primarily when related to the weekly chart.

 

Bitcoin’s (BTC) Weekly Chart

Bitcoin (BTC) Weekly Chart

Bitcoin (BTC) Weekly Chart

I’ve mentioned in previous articles the powerful discovery by Manesh Patel; I call it the Two Clouds Theory. In a nutshell, the theory is that when the current Senkou Span A and current Senkou Span B both point in the direction of the Future Cloud, then that is when trends start to make their moves. The time period where we see the weekly Senkou Span A and Senkou Span B pointing in the direction of the future cloud (up) is quite a long one. Including last week, Bitcoin will spend roughly five weeks with Senkou Span and Senkou Span B pointing towards the Future Cloud. What’s more: the slope of that rise increases every week. The slope of the Cloud is one that needs addressing. If prices are going to continue higher from current price levels, then Bitcoin needs to move up much higher and much faster. To put it into perspective, to keep Bitcoin above the weekly Cloud, Bitcoin will need to be trading at the very least above the $9,000 value area by the week of December 23rd, 2019.

 

Bitcoin’s (BTC) Daily Chart

Bitcoin (BTC) Daily Chart

Bitcoin (BTC) Daily Chart

With a large number of pundits and news outlets wondering if there would or could be a Christmas rally for Bitcoin, the weekly chart certainly indicates that the structure is there. The daily chart stands in contrast to the 4-hour and Weekly charts. While Bitcoin’s daily chart shows very near bearish continuation, there is very little in the form of resistance above the Kijun-Sen, which is at $7879. The Cloud above price continues to get thinner and thinner as the days go on, and Senkou Span B will be flat for the next thirteen days. Even though Senkou Span B is flat – the thinness of the Cloud on the daily should represent an excellent opportunity to see Bitcoin rally out and above over the next few weeks. The most critical level I am watching right now is where the daily candlesticks are going to close. If there is any daily candlestick that closes below the Tenkan-Sen, then we may be in for a very dangerous bearish continuation trade south. We need to be vigilant about where Bitcoin is currently trading and pay very close attention to any sudden, fakeout moves south or north.