In a technical analysis shared by Katie Stockton, founder and managing partner of Fairlead Strategies, Bitcoin (BTC) Bullish signals emerged and supported an ongoing price rally towards the widely watched 200-day simple moving average (SMA).
Defending the Ichimoku cloud support in the last strength on the daily chart, BTC rose from $38,500 to $42,200.
Created by Japanese journalist Goichi Hosoda in the late 1960s Ichimoku cloud consists of two lines. Leading opening A and leading opening B. Both drawn 26 days before the last candle. The indicator is commonly used to identify support and resistance, and crossovers represent a forewarning of bullish or bearish breakouts.
The recent bullish defense seems to be supported by positive signals from technical tools such as stochastic and MACD histograms.
“Substantial cloud-based support was held around $40,000 and after a three-day rally, it was able to support a short-term uptrend by generating an overbought ‘overbought’ signal from the daily stochastic,” Stockton wrote in an email. “The daily MACD is also stuck, reflecting improved short-term momentum supporting a move higher towards the next resistance around $48,100 as defined by the 200-day MA.”
According to technical analysis, stochastic is an indicator rated between 0 and 100, which determines traders’ oversold and overbought situations and their trade entry and exit points. An asset is considered oversold when the stochastic falls below 20 and overbought when it falls below 80. A turn below 20 is taken as a buy signal.
The moving average convergence divergence (MACD) histogram is a technical indicator used to identify trend changes and trend strength. It reflects positive/negative changes of the indicator, bullish/downtrend changes. Meanwhile, the “pinch” – descending bars or lower highs above the zero line and higher lows below the zero line represent bullishness and exhaustion.
The three-day increase seems to target the 200-day SMA at $48,000. In late March, the average proved to be a hard level to break and stopped the recovery rally from the lows around $37,500. On the other hand, Monday’s low of $38,550 is the key level to hold.
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.