$85K Marks Bitcoin’s ‘Cloud Resistance,’ Shifting Risk-Reward Balance for Bullish Traders: Godbole

Bitcoin Confronts Key Resistance at $85K, Traders Warn of Limited Upside Due to Ichimoku Cloud

Bitcoin’s recent price movement has come under pressure from the Ichimoku Cloud, signaling potential challenges for bullish traders as the cryptocurrency struggles to break past significant resistance levels.

For traders, choosing the right entry point is crucial. The success of any trade often hinges on the timing and price levels, which influence the risk-reward balance and can drastically impact outcomes.

Despite some positive signs in the short term, with increased bullish sentiment in the options market, bitcoin’s current position near critical resistance points raises concerns. This resistance, which has limited price action in the past, suggests that the risk-reward profile for bullish positions is less favorable right now.

Since Saturday, BTC has tested the lower edge of the Ichimoku Cloud, currently positioned near $85K. The Ichimoku Cloud is a widely used technical indicator in trading, developed by Japanese journalist Goichi Hosoda. It provides a comprehensive view of market trends, resistance, and support levels by using five distinct components: Leading Span A, Leading Span B, the Conversion Line (Tenkan-Sen), the Base Line (Kijun-Sen), and a lagging closing price line.

The cloud’s upper and lower boundaries represent areas of potential resistance and support, depending on where the price is located relative to the cloud. If the price sits above the cloud, it suggests a bullish trend, while prices below the cloud indicate a bearish outlook.

Earlier this year, BTC dipped below $100K and traded beneath the Ichimoku Cloud. Since then, the lower boundary of the cloud has acted as a strong resistance zone, preventing any substantial recovery in price.

Now, as BTC nears this resistance level again, traders looking to enter long positions might want to be cautious. The immediate upside is constrained by the $85K resistance, and support is located beneath $75K, nearly $10K lower than the current price. This creates a less favorable risk-reward scenario for traders betting on further upward movement.

The previous rejection from the Ichimoku Cloud on April 2 led to a sharp sell-off, pushing BTC below $75K, resembling a similar pattern seen after a rejection in February.

As such, the current interaction with the cloud’s resistance warrants close attention. A further rejection could bring renewed selling pressure and cause the price to retrace back to the $75K support level.

Conversely, if bitcoin manages to break above the $90K mark and push past the cloud’s upper boundary, it could signal the start of a fresh bull run, driving the cryptocurrency to new highs.