Jonathan Morgan
Independent Analyst
- Bitcoin price returns to equilibrium within the Ichimoku Kinko Hyo system.
- Another week of sideways price action is probable given the significant gains required for BTC to begin a new uptrend.
- Downside risks remain very real and could be significant.
Bitcoin price dropped below a critical Ichimoku level on Thursday, February 10, and extended the drop into Sunday, February 13. The pullback completed a necessary and expected return to equilibrium within the Ichimoku Kinko Hyo system.
Bitcoin price action indecisive and sideways at the 2022 Volume Point Of Control
Bitcoin price recently completed an Ichimoku gap closure between the bodies of the daily candlesticks and the Tenkan-Sen. This gap-fill between the candlestick bodies and the Tenkan-Sen returned price action to a level of equilibrium in the Ichimoku system.
There were two scenarios for Bitcoin price identified on Friday. The first was a return to equilibrium over time, involving a sideways trading range between $43,000 and $44,000. The second and most likely was for Bitcoin price to return to the Tenken-Sen at $41,000. The latter of the two scenarios played out for Bitcoin price.
Looking forward to February 20, the top of the Ichimoku Cloud (Senkou Span B) falls to $42,500 from the current $49,500. As a result, it is increasingly likely that Bitcoin could trade sideways between the 61.8% Fibonacci retracement at $41,000 and the 2022 Volume Point Of Control at $43,000 until February 20 before positioning for an Ideal Bullish Ichimoku Breakout above the Cloud.
BTC/USD Daily Ichimoku Kinko Hyo Chart
However, downside risks remain. On the daily chart, there is one final Ichimoku support level – the Kijun-Sen at $39,400. If Bitcoin price closed below that level, a return to the 2022 lows near $33,000 is almost inevitable.
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