The Ichimoku Cloud is a momentum indicator often used in technical analysis to gauge an asset’s trend. It is currently indicating that Bitcoin (BTC) is healthily recovering from an important support area.
The daily chart of Bitcoin with the Ichimoku Cloud. | Source: BTCUSD on TradingView.com, Josh Olszwicz
The cloud in the Ichimoku indicator is best described as a support line. If an asset goes too far high up the cloud, it could mean that it is overbought.
But if Bitcoin is steadily recovering within the cloud, then it suggests it is seeing healthy and stable accumulation.
Bitcoin Rises Above $11,000 Treading Above the Cloud
In the near term, traders say that Bitcoin needs to hold above $10,700 to see further upside. In a technical sense, the $10,700 area is a critical support area in the short-term BTC price trend.
Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, said:
“Very simple, plain analysis. Holding above $10,700 is beneficial for further upwards momentum. The crucial breaker is $11,150. If that breaks, I’ll anticipate an acceleration towards $12,000.”
The important technical levels for Bitcoin in the short term are $10,700, $11,200 and $12,000. If BTC successfully breaks out of $11,200, which is the resistance level it rejected in early September, $12,000 becomes more likely.
Despite the optimistic outlook of Bitcoin, researchers are becoming cautious in predicting a major altseason.
As NewsBTC previously reported, even major decentralized finance (DeFi) tokens dropped by 40% to 70% in the past two weeks.
Chainlink, as an example, declined by more than 40% since September 12, within merely a month.
It Might be Too Early to Call an Alt Season, Researchers Say
Researchers at the on-chain market data firm Santiment explained that large-cap assets, like Bitcoin, recovered in the past week.
However, the researchers noted that the majority of top 100 cryptocurrencies got “decimated.” Due to the overall nervousness in the market, capital has cycled back into major cryptocurrencies.
Considering the trend, the researchers noted that an altseason, especially among small cap cryptocurrencies, might be delayed. They explained:
“In spite of this, the majority of top 100 #blockchains have been decimated. Particularly among mid and small cap assets, the sell-offs have come hard and swiftly. As many longer term traders have experienced over the years, #altcoins runs can be enjoyable when #Bitcoin is climbing. But when volatility hits and mid-sized, market-wide dumps occur as they have over the past month, the small caps generally have the most difficulty recovering.”
For now, the technical strength of Bitcoin after the recovery above $11,000 appears to be buoying the sentiment around altcoins.
