Bitcoin is at a critical point - Consider this very seriously!!Hey family! Welcome to the wild world of cryptocurrencies, where the market can swing from one extreme to another in the blink of an eye. Crypto trading is known for its high volatility, which means prices can go up or down dramatically in short periods. Right now, many traders are buzzing with excitement, expecting Bitcoin to go on a bullish run. However, in such a dynamic market, it's always wise to consider the other side of the coin. Given the current sentiment, there's a good chance we might see some bearish moves too. So, while we're all hoping for the best, let's keep our eyes open for potential dips and prepare accordingly. Let's dive into today's analysis with that in mind!
Overview
This report provides a detailed technical analysis of Bitcoin (BTC) against Tether (USDT), focusing on the Ichimoku Cloud and chart pattern formation in combination.
Head and Shoulders Pattern
Pattern Description: The chart shows a Head and Shoulders pattern, which is a bearish reversal pattern following an uptrend. It consists of three peaks: the left shoulder, the head, and the right shoulder.
Identification on Chart:
Left Shoulder : Formed around mid-November.
Head : Formed in Mid December, peaking at approximately $108,000+.
Right Shoulder: Currently forming as of Jan 10, 2025, with a peak slightly lower than the head formed on Jan 7th.
Neckline : The neckline is drawn at the price level where the dips occur between these peaks and it is a wise choice to take the price zone as a whole in to consideration instead of just a specific price level. By this the neckline zone can be taken as between $89,800 & $92,400. A breakout below this level suggests a strong trend reversal.
Ichimoku Cloud Analysis
The Ichimoku Cloud, or Ichimoku Kinko Hyo, provides insights into support/resistance, momentum, and trend direction .
Here's the breakdown:
Kumo (Cloud): The cloud is formed by two lines, Senkou Span A and Senkou Span B, projected 26 periods into the future.
Current Cloud: The price has recently broken below from the upper cloud support, which was acting as support, and heading to the bottom of the cloud. This breakout below the cloud is a bearish signal indicating potential further downside.
Future Cloud : The future cloud (shaded area ahead) is sloping upwards, which traditionally would suggest bullish momentum, but given the current price action below the cloud and the reddish color it created, it might imply a false bullish signal or a potential resistance if the price attempts to recover.
Tenkan-sen (Conversion Line) and Kijun-sen (Base Line):
Tenkan-sen : This line (blue) is the average of the highest high and lowest low over the last 9 periods. It's currently below the Kijun-sen, reinforcing the bearish sentiment.
Kijun-sen: This line (red) is the average of the highest high and lowest low over the last 26 periods. The price is below both lines, indicating bearish momentum.
Chikou Span (Lagging Span) : This line shows the current price action shifted back 26 periods, providing a historical perspective.
Position: The Chikou Span is below the price action from 26 periods ago, which is another bearish signal.
Kijun-sen Cross : The Tenkan-sen crossing below the Kijun-sen while both are below the cloud strengthens the bearish outlook.
Key Price Levels
Breakout Level: $89,800 (Neckline)
Current Price: Around $92,750
Resistance: Cloud top around $95,000 - $97,000 - $100,000.
Support : Below the neckline, potential support around $85,000 to $82,000.
Volume Analysis
Volume: While high/average volume during the formation of the head might suggests strong participation, the volume during the right shoulder formation is lower, possibly indicating reduced buying interest.
Last Note : As a confluence the Trend Strength Index is also showing a declining movement both the weekly and daily charts even though it it at floor levels on the 4 Hr chart. This basically tells us that we might see some dip movements in the following days if volume continue dumping like it does in the past 3 1D candles.
Conclusion
Using the Ichimoku Cloud, we observe several bearish signals for Bitcoin:
The price is below the cloud, indicating bearish momentum.
The Tenkan-sen is below the Kijun-sen, and both are below the cloud, reinforcing the bearish trend.
The Chikou Span is below past price action, further confirming the bearish scenario.
Despite the future cloud showing an upward slope, the current price action suggests a continuation of the downtrend, with the Head and Shoulders pattern serving as a strong bearish indicator. Traders should consider this analysis in light of overall market conditions, keeping in mind that while the Ichimoku provides comprehensive insights, market sentiment and external factors also play crucial roles. Watch for any potential retest of the neckline or cloud for further confirmation of the trend.
But instead of the bearish breakout to the downward, if Bitcoin can rebound from the current price level, it is going to be yet another strong bullish move for a formation of a megaphone which is unlikely though.
For risk management, always consider using stop-loss orders, especially in volatile markets like cryptocurrency.
Stay Tuned for further updates.
With Regards.
CTE.
