Bitcoin is down approximately 5% from its high of $24 258. At the moment, we are paying close attention to the price trading near the 20-day SMA. If the price breaks and holds below this moving average (acting as a support), it will bolster bearish odds and hint at a potential trend reversal. Simultaneously, to support a thesis about the reversal, we would like to see the volume continue to grow and accompany the price drop. In addition to that, we will also seek clues in the stock market, which stays highly correlated with risk assets like cryptocurrencies. Therefore, we will watch Jerome Powell’s speech and expect him to reiterate a firm stance of the FED toward raising interest rates. As a result, this might spook a market that remains overly optimistic about the economic outlook in 2023. Over time, we expect the reality of bad earnings and more tightening to sink, leading to declines across the board for stocks and cryptocurrencies. With that said, our price targets for BTCUSD stay at $15 000 and $13 000.
Illustration 1.01 Illustration 1.01 displays the daily chart of BTCUSD. The yellow arrow indicates the retracement of the price toward the 20-day SMA. A breakout below both 20-day and 50-day SMAs will be very bearish. Contrarily, if the price holds above the 20-day SMA, it will be bullish.
Technical analysis Daily time frame = Slightly bearish Weekly time frame = Neutral/Slightly bullish
Illustration 1.02 Illustration 1.02 shows the daily chart of BTCUSD. If the price breaks below Immediate support/resistance, it will add to a bearish case; the same applies to a breakout below Support 1.
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.
Comment
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Just a matter of fact, there is a golden cross forming on the daily time frame and a death cross on the weekly time frame.
Trade active
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BTCUSD breaks below $22 000, and volume grows, which is very bearish.
Thanks a lot for this warning, we need that. I see many are quite bullish or hope to be bullish, because after two days of losses in New York, U.S. stocks, as well as international markets, are trying to stabilize again. Many now continue to believe that Fed Chair Jerome Powell will say that the Fed has done a lot and the impact of its monetary policy changes will be seen later this year, however, we shall also see headwinds for risk sentiment - especially for the recently strongly outperforming growth sector, which has managed to hold steady even with rising rate hike bets, rising bond yields and a stronger USD. So the pressure on the markets continues to increase, especially after last week's outstanding U.S. labor market figures make it unlikely that the Fed will ease the tight monetary policy anytime soon and more likely that further rate hikes are coming. By the way, we shall not forget about the geopolitical tensions between the U.S. and China and there are still strong signs that corporate earnings will not return to rapid growth anytime soon. Powell will be interviewed by David Rubinstein at the Economic Club of Washington later today, we may expect the USD bulls to continue to call the shots, although we may see some counter moves after the recent strong USD gains. Markets try to stabilize but storm of headwinds grows.
Tradersweekly
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@AngelaCat, Thank you very much for your detailed view. I agree with your assessment. Though, I must admit that the last print was a surprise. There is really a lot of contradictory data out there in the market. We will see what Powell says today.
DemoDiaryFX_Trading
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@AngelaCat, great comment, well done, and this is my view
AngelaCat
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@Tradersweekly Jerome Powell was indecisive again, but said that surprisingly strong economic data like last week’s jobs report could push the central bank into raising interest rates more than markets expect. We got some volatility today. however we shall have more and more concerns from now on that the Fed will actually raise rates further and keep rates high for longer. Because it would be hard for the Fed to think about cutting rates in the face of such a strong labor market. If the Fed is data-driven, then easing is a long way to go. I guess we could expect rate hike expectations to further rise.
Elefant-Schnitzel
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@AngelaCat, what he meant to say was, "until we start eating govt bonds to keep social security and CONGRESS in the black." QE is around the corner. They said 1% rates last year. LOL. Believe nothing they say. Just watch the charts and divergences. SP500 descending broadening wedge with 4800 target. Show me ONCE the sp500 created a structure like that on daily time frame and didnt deliver even a 50% target hit... Impossible.
Elefant-Schnitzel
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So basically 50k then back to 20k then up to 300k thanks!
By the way, we shall not forget about the geopolitical tensions between the U.S. and China and there are still strong signs that corporate earnings will not return to rapid growth anytime soon. Powell will be interviewed by David Rubinstein at the Economic Club of Washington later today, we may expect the USD bulls to continue to call the shots, although we may see some counter moves after the recent strong USD gains. Markets try to stabilize but storm of headwinds grows.