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XRP Moving Above 'Cloud' Resistance Is Bullish Precedent for Bitcoin: Analyst
We view XRP's breakout above the Ichimoku cloud as a good example for bitcoin, Fairlead's Katie Stockton said.
Updated Jul 21, 2023, 5:10 p.m. Published Jul 20, 2023, 5:38 a.m.
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Payments-focused XRP has set a bullish precedent for market leader bitcoin with a move above key price resistance that has opened doors for a sustained rally.
XRP surged nearly 60% last week, registering its best performance since August 2021. The rally saw prices move convincingly above a technical analysis indicator called "Ichimoku cloud" on the weekly chart, confirming a bullish breakout.
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Bitcoin is yet to achieve that feat.
"We view [XRP's] cloud breakout as a good example for bitcoin," founder and managing partner at Fairlead Strategies said in a note to clients.
The Ichimoku Cloud, a technical analysis indicator created by Japanese journalist Goichi Hosoda in the late 1960s, is widely used by traders and analysts to identify support and resistance levels and gauge trend changes. The indicator comprises five lines based on the price's moving averages: Leading Span A, Leading Span B, Conversion Line or Tenkan-Sen (T), Base Line or Kijun-Sen (K) and a lagging closing price line. The spread between the Leading Span A and the leading Span B represents the cloud.
Crossovers above or below the cloud are widely taken to represent bullish or bearish trend change.
XRP has established a foothold above the Ichimoku cloud, while bitcoin remains locked in a narrow range below the cloud resistance (upper end).The token's breakout follows a year-long consolidation or basing pattern and suggests more gains ahead.
"The move is meaningful on the chart because it resolves a year-long basing process higher. Intermediate-term momentum is positive and there are (surprisingly) no signs of upside exhaustion, supporting upside follow-through, with next resistance near $0.92," Stockton noted.
A similar bullish outlook awaits bitcoin on the higher side of the Ichimoku cloud, with the next resistance level at $31,900.
At press time, XRP changed hands at 83 cents, while bitcoin traded near $30,000.
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