This is a daily technical analysis of Coindesk analyst and chartered market technician Omkar Godbole.
Bitcoin’s (BTC) Bullish Advance has encountered a resistance zone over $ 88,000, characterized by crucial levels that can do or break the ongoing improvement.
The first and perhaps most critical level of the resistance cluster is the 200-day simple sliding average (SMA) to $ 88,356. SMA is widely considered a key indicator of prolonged momentum. Early this month, Coinbase called institutional analysts downward break for the 200-day SMA in March a sign of the beginning of a potential crypto winter.
So a new step could be taken over the 200-day SMA to represent a renewed bullish shift in momentum.
Such a movement would trigger a double breakout as Ichimoku Cloud’s upper end is close to 200-day SMA. A feature over the Ichimoku cloud is also said to reflect a bullish shift in momentum.
Ichimoku Cloud was developed by a Japanese journalist in the 1960s and is a technical analysis indicator that offers a comprehensive overview of the Market Momentum, support and resistance levels. The indicator includes five lines: Leading Span A, Leading Span B, Conversion Line or Tenkan-sen (T), Baseline or Kijun-sen (K) and a hanging closure price line. The difference between leading span A and B forms the Ichimoku cloud.
The third and final level that forms the resistance cluster is the high of $ 88,804 on March 24, from which the market was lower and fell back to $ 75,000.
A Make-Or-Break Resistance Zone?
Behavioral aspects of trade come into play when an asset approaches a resistance zone, especially at key levels such as the 200-day SMA and the Ichimoku cloud.
Prospectus theory suggests that people are typically risk -aperture in terms of gains and risk search with regard to losses, known as the “reflection effect.” So, as a trader, people tend to be risk -aperce while locking in profits and continuing to lose trades open.
This trend is reinforced when an asset encounters a significant resistance zone. Dealers who entered the Bitcoin market around $ 75K, foreseeing a rebound, may feel pressured to make profits as the price approaches this resistance. Such sales could again slow down the price ascension or even trigger a new downturn.
Conversely, if Bitcoin successfully breaks through the resistance zone, fear of missing out on more dealers to make bullish bets, additional fuel for bullish momentum and pushing the price higher.
