The hourly charts are giving some clear breakout signals in the majority of cryptocurrencies, especially in the top 3 market cap coins (BTC, ETH and XRP). But we need to take a close look at the other time frames, specifically the 4-hour and Daily charts to see where some near-term resistance will show up, which could generate another move lower. However, this current move is probably the most bullish move above the 1-hour cloud we’ve seen in all of 2018.
Bitcoin 1-hour Ichimoku Chart
Bitcoin’s one hour chart shows a very nice breakout from the cloud with the confirmation of the breakout being met when the Lagging Span broke above the cloud at 3927. We then saw very bullish activity with any pullbacks to the Conversion Line (blue average) begin bought up. This was mirrored when price returned to test the Base Line (red average), which continues to hold as a support zone. And also note that the cloud ahead is thick and appears to be getting thicker – this is a very positive and bullish development because thick clouds represent strength and the top of thick cloud formations can typically hold as a good support zone for 2-3 major tests on the hourly time frame. This is actually the thickest developing bullish cloud in all of 2018 so far. Be aware though that because we have fallen through the Conversion Line to test the Base Line, we should observe a fall below the Base Line to test the top of the cloud, but any support being found and rejection of any lower moves should propel price significantly higher. Near-term support appears to be on the 360-degree Square of 9 level at 4225, which is very near the current 1-hour Base Line at 4297.
Bitcoin 4-hour Ichimoku Chart
We have some positive conditions with the short-term trend showing the Conversion Line over the Base Line as well as the Lagging Span above price and price inside the cloud. The green horizontal line is a 360-degree Square of 9 Gann angle that is also a strong resistance level that is now holding as support. We should be a little cautious about how much higher price can move before experiencing some resistance, which would certainly be near the top of the cloud 4559. The Lagging Span will also run into the bottom of the cloud around that same value area. Those levels should certainly hold as some initial resistance that would need to be tested before another move higher.
Bitcoin Daily Ichimoku Chart
The Daily chart shows we actually do have some bias for a continued move higher. Price is quite a distance away from the Base Line and we should expect price to move to test that line, which is currently sitting at 4998.
Remember: the further price moves away from the Base Line, the higher the probability of it ‘snapping back’ to that line. There is a very thin cloud directly above price, which means the resistance is very weak. Thin clouds represent weakness and should not be considered areas of significant support or resistance – they can be tricky. We actually wouldn’t see the thicker cloud forming until price was trading into the 16th of December, so there is time to move higher, faster. Also, note the horizontal lines on the screen. The black horizontal line is the 315-degree Square of 9 Gann angle that held as support for 5 days. Price closed above that line all five of those days.