BTC-USD is resting just above critical support as illustrated in the chart below; the Ichimoku cloud is green and provides a support zone going forward in the region $653-$606. Volumes have decreased over the past week on the BitStamp exchange and the current price action has hardly moved from today’s open. Together, these factors suggesting we should look for an entry before volatility returns to the market. The risk is more weighted to the upside for BTC-USD so we should look for good buying opportunities.
The market has failed so far to break into this support zone suggesting that the price will have a higher likelihood of bouncing upwards from here. Moreover, bullish momentum is indicated by the conversion (blue) line which is trending higher than the base (red) line. Only if the market closes below the base line will a bullish outlook be invalidated.
Further bullish confirmation will be given if the market manages to close back above the conversion line today, which is offering minor resistance at $667.10. A daily close above this level today will provide a strong bullish signal and will see the market test the recent at $684.19 and then the psychological $700 level.
On the daily timeframe, we can see that the trend has been up since late June. After posting a fresh high at $684.19, BTC-USD has been looking to establish a new support zone before continuing higher. The chart below shows that the price is currently within the range of the most recent fractal buy and sell levels at $605.50 and $684.19 respectively. Market participants could wait for a break-out of either of these levels before getting into a position.
For example, a limit sell order at $605.00 with a small stop loss would take advantage of a bearish breakout and would likely see an intensification of downward momentum. The market will look to target $540 in this case. On the other hand, a limit buy order could be placed at $685 to take advantage of a break-out to the upside with a target of $725.
The 4-hour timeframe is shown below and shows how the market has bounced off the support zone provided by the Ichimoku cloud at this timeframe. However, bearish momentum is suggested to be in play at the moment as the conversion line is trending below the base line. Buy orders will be less risky once the market closes above the conversion line, currently offering minor resistance at $667.08.
The most recent fractal levels indicate critical support and resistance going forward. If we see a break below the fractal support at $660.10 then we would see the price within the Ichimoku cloud and could possibly break-out to the downside which would indicate the start of medium-term downtrend. Alternatively, the cloud could provide strong support again. Therefore, buying once the fractal at $675.00 is broken would be advised.