Bitcoin was in crypto headlines during the weekend as price made a sharp reversal lower and a deep pull back from above $60k to $50k. As we mentioned in previous analysis, the chances of a major reversal in Bitcoin and a deeper correction towards $40k are high. Today we use the Ichimoku cloud indicator to identify key support and resistance levels.
Bitcoin continues to trade above the Daily Ichimoku cloud since $11,000 price level. Although we have some weakening signs as price is breaking below the tenkan-sen (Red line indicator) and the kijun-sen (yellow line indicator), trend remains bullish as long as price is above the Kumo (cloud). Price is now challenging this cloud support. This support is found at $54,400. Breaking below this level trend changes to neutral. Next support will be at $49,300. If price breaks below the Ichimoku cloud trend will change to bearish. Resistance by the kijun-sen and tenkan-sen indicators is at $57,700. Bulls need to recapture this level in order to decrease chances of a bigger correction. More aggressive traders would buy this dip since price is right above the major support and would close positions if this support is broken ($54,400). Less aggressive traders would prefer to buy once price breaks above the tenkan-sen and kijun-sen indicators.
