Bitcoin (BTC) has seen a remarkable 85% rally in the first half of 2021, outperforming traditional risk assets by a wide margin. Despite this, technical analysis research provider Fairlead Strategies has maintained a long-term neutral stance on the world’s largest cryptocurrency by market value. According to Fairlead, the long-term outlook will become bullish once prices break above the Ichimoku cloud resistance at $31,900 and momentum indicators such as the MACD histogram validate the move.
We remain long-term neutral on bitcoin, but a breakout above the weekly cloud and a monthly MACD ‘buy’ signal would dictate a bullish bias, analysts at Fairlead Strategies said in a note to clients on Monday. The Ichimoku cloud, created by Japanese journalist Goichi Hosoda in the late 1960s, is used by traders and analysts to define support and resistance levels and identify momentum and trend direction. It consists of two lines – the leading span A and the leading span B – with the gap between them forming the cloud. Crossovers above or below the cloud are taken to represent bullish or bearish trend changes.
The MACD histogram is a moving average-based indicator used to measure trend strength and changes. Crossovers above zero indicate a bullish shift in momentum, while crossovers below zero suggest otherwise. According to Fairlead, the weekly chart (above left) shows bitcoin is looking to extend last week’s 15.5% rise, the biggest since March. At press time, the cryptocurrency is trading at $30,700, with the cloud resistance located at around $31,900. The renewed positive reading on the weekly chart MACD and the upturn in the stochastic indicator suggest the possibility of a breakout above the cloud resistance. The monthly chart MACD is yet to flash the bullish signal.