Right after Jerome Powell's speech, the stock market dropped sharply, dragging cryptocurrencies with it. As a result, Bitcoin fell approximately 6%, dropping below 21 000 USD and subsequently below the immediate support. That is particularly bearish as this development constitutes a new low for BTCUSD, further confirming the downtrend. As if it was not enough, volume continues to grow while the price declines, suggesting a strengthening selling pressure.
As for the fundamental factors, it is clear now that the FED's pivot is dead, and there is no reversal in the central bank's monetary policy. As we previously noted, this will inadvertently drag the global economy into a deeper recession, leading to even a higher risk aversion. Consequently, we expect this to pull Bitcoin below its 2022 lows.
Concerning technical factors, these are flashing warning signs across the board. We expect a heavy selloff in the short-term future. Indeed, we would not be surprised to see Bitcoin break below 20 000 USD over the weekend. Accordingly, we stick to our price target of 17 500 USD and 15 000 USD.
Illustration 1.01 Illustration 1.01 shows the daily chart of Bitcoin and simple support/resistance levels. Yellow arrows indicate bearish breakouts. The green arrow indicates growing volume, which supports our bearish thesis; indeed, in our previous post, we stated that this would be an ideal picture to confirm our hypothesis.
Technical analysis - daily time frame RSI, MACD, Stochastic, DM+, and DM- are all bearish. Overall, the daily time frame is bearish.
Illustration 1.02 The picture above shows the monthly chart of BTCUSD. Again, extremely shallow volumes hint at brewing troubles for Bitcoin.
Technical analysis - weekly time frame RSI, MACD, Stochastic, DM+, and DM- are all bearish. Overall, the weekly time frame is bearish.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
The flag pole on this bearish flag is about 2k deep. If BTC follows the flag pole scenario our next stop should be at around 19500 and it should be there by tonight.
Had the market not dreamt of a “Fed Pivot” no one would be in this predicament at this time. Instead, the market rallied these past few weeks against all rational indicators (anyone seen housing sales?). One certain conclusion here is that the market has amnesia (is quick to forget fundamentals), and is highly emotional/event-driven. In that vein, BTC will react similarly. The only turnaround for the markets at this time, I only see the ushering of a new Congress (Democrats will lose MAJORLY in the House and Senate), and that’ll be some boost to the markets as a potential change in POLICY May take place in Q1 ‘23.
Tradersweekly
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@Free_Loader, I am little bit afraid that the change might came later in 2023, rather than sooner in Q1. But we will see, the situation does not look good regardless. Thanks for the comment.
cryptospawn
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@Free_Loader, Bingo! Housing bubble has popped. Yet still, most traders love to ignore signs on the road instead, in favor of wet dream daydreams. These are usually those who hold on to these assets under the delusion that they will just go up and up. Then they end up bagholding and hoping the market comes back so they can catch a breath. If they just sold when it peaked like I did they'd be hoping it dumps further just like me. Back in 2018 I lost my ass and the ass of anyone standing within 100 yards of me for thinking like the masses. I learned from that. The new me is now all in fiat waiting for the right signs to buy back in at bargain prices.