Fri. Aug 19th, 2022

Nineteen consecutive trading days in the Cloud


One of the most critical aspects of the Ichimoku Kino Hyo system is that it tells us when not to trade. During my trading, if I notice an instrument that is trading inside the Cloud on the time frame that I am trading, I skip it. I avoid it. Trying to trade an instrument when it is inside the Cloud is a great way to lose a lot of money. The Cloud is where trading accounts go to die. The Cloud represents indecision, volatility, lack of clear momentum, congestion and all-around whipsaw like activity. The longer price spends inside the Cloud; the more important and powerful the eventual breakout will be. So it behooves us to measure the amount of time Bitcoin has spent inside the Cloud.

Today is the nineteenth consecutive day of prices trading inside the Cloud. This long period of congestion is matched only once in Bitcoin’s entire history – and that was in September of 2015. From the looks of the current trend and aggregate behavior in the cryptocurrency markets, Bitcoin looks poised to spend more nineteen days inside the Cloud. Depending on the activity tomorrow (November 15th, 2019), Bitcoin will make a new historical consecutive day congestion record. I believe it is most definitely in the realm of probabilities that we could see Bitcoin extend this congestion period a further twelve days until Bitcoin is trading at the thinnest part of the Ichimoku Cloud on November 27th, 2019.

So, will Bitcoin breakout higher from this level? I believe it is likely – but it seems more likely we will see a resumption of the downtrend from June – and a big selloff could occur here very soon. I do want to call your attention to the current values of the oscillators below. The three indicators below are, from top to bottom: The Relative Strength Index, The Composite Index, and the %B. I then boxed in zones on the left coincide with the selloff that occurred between September 21st, 2019, and September 24th, 2019. Observe the structure and position of these indicators related to the boxed zones on the right. They appear very, very similar and are in the same relative value areas as well. The %B oscillator should be of particular interest to those who are familiar with the great John Bollinger’s tools.

I find the %B to be almost a leading indicator. When the default settings for the bottom band are set to 0.2 instead of 0, we can get a sort of head start on the probability of how likely a future breakout move will continue. When the %B line crosses below 0.2, I then look to see where the RSI is at. If it’s above 45 on Bitcoin’s daily chart, then I know that any breakout lower is more than likely going to be sustained and robust. That is the exact condition that Bitcoin is currently in and one where we should be very cautious about going long at the present value area.

By Dov Herman

Dov is a Blockchain and Forex trading enthusiast, who spends most of his time trading and examining software who are related to cryptocurrencies and forex trading. You can follow on Dov’s reviews and articles here on TrustedBrokerz and across the web.