Bitcoin Faces Critical $85K Resistance as Ichimoku Cloud Limits Bulls’ Upward Momentum
Bitcoin’s price action has hit a crucial point of resistance at the $85K level, presenting an unfavorable risk-reward situation for bullish traders, according to the Ichimoku Cloud analysis.
In trading, timing and price level are key factors that influence a trader’s success, as they directly affect the risk-reward ratio. A favorable entry point can significantly improve a trader’s chances of success.
While Bitcoin’s short-term outlook may seem positive, with increasing demand for bullish positions in the options market, its close proximity to strong resistance from the Ichimoku Cloud suggests that the risk for bullish bets is rising.
Since Saturday, Bitcoin has been testing the lower edge of the Ichimoku Cloud near $85K. The Ichimoku Cloud, a comprehensive technical tool that originated in Japan, offers insight into market momentum, potential support and resistance levels. It consists of five primary lines, with the cloud formed between Leading Span A and Leading Span B. A price above the cloud generally indicates a bullish trend, while a price below the cloud signals a bearish outlook.
In early February, Bitcoin dropped below $100K and traded beneath the Ichimoku Cloud, where the lower boundary of the cloud acted as resistance and capped subsequent rallies. Since then, this boundary has continued to play a key role in limiting Bitcoin’s upward movement.
With Bitcoin testing this level again, traders looking to enter long positions may want to be cautious. The immediate upside could be restricted by the $85K resistance, while the price could potentially retrace to support at $75K, almost $10K lower. This creates an unfavorable risk-reward situation for those looking to enter new bullish positions.
A similar rejection occurred on April 2, leading to a sharp sell-off and a drop below $75K, following a similar pattern seen in February. Therefore, the current test of the Ichimoku Cloud’s resistance warrants close attention. A failure to break above $85K may lead to renewed selling pressure, bringing Bitcoin back toward $75K. Conversely, a breakout above the $90K level would signal a continuation of the broader bullish trend, potentially pushing Bitcoin to new highs.
