Source: PaxForex Premium Analytics Portal, Fundamental Insight
The Miami Beach Convention Center will host the 2022 Bitcoin music festival, Sound Money Fest, starting today, but while enthusiasts view it as a platform to push Bitcoin awareness and price action higher, the BTC/USD shows bearish signs. Smart money selling led to eight consecutive down days after hitting resistance. The bear market rally in global equity markets shows signs of exhaustion, which is likely to add to selling pressure across cryptocurrencies, where Bitcoin and Ethereum struggle, smaller competitors push higher amid more attractive real-world usage.
German authorities seized $25 million in Bitcoin from an illegal darknet marketplace, while US-based MicroStrategy added $190 million to its Bitcoin holding. Underneath the mainstream news flow is a breakdown in technical indicators, suggesting price action is on track to accelerate to the downside as soon as equity markets resume their slide. While Bitcoin hardliners believe their favored asset presents a disconnected financial tool that will revolutionize the global financial system, Bitcoin has moved into the corner of what it was set to change. It is now highly correlated, fails to offer an inflationary hedge, and is not a safe-haven asset, as the past year has confirmed.
With selling across risk assets likely to dominate the second quarter of 2022, as soon as the first-quarter earnings season accelerates, Bitcoin is positioned to slide and test the 40,000 psychological support area. Traders should carefully monitor price action once it approaches this level. A breakdown is most likely to send Bitcoin on a test of 2022 lows. Inflationary pressures and supply chain issues will add downside catalysts to financial markets, with the inverted US yield curve pointing towards a recession. Should it materialize, Bitcoin will follow risk assets lower.
The forecast for the BTC/USD is bearish in the short term after this cryptocurrency pair was ejected by its resistance area and moved lower for eight consecutive trading sessions. While the Tenkan-sen extended its advance, the Kijun-sen flatlined, confirming the lack of short-term bullishness. The Ichimoku Kinko Hyo Cloud shows an overall bearish trend but halted its descent, pointing to a likely increase in volatility. Traders should monitor the CCI after its breakdown from extreme overbought territory, as a move below zero can trigger more selling. Will bears capitalize on recent weakness and force the BTC/USD into its horizontal support area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the BTC/USD remain inside the or breakdown below the 44,370 to 46,530 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 45,300
- Take Profit Zone: 39,360 – 40,570
- Stop Loss Level: 47,150
Should price action for the BTC/USD breakout above 46,530, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 47,150
- Take Profit Zone: 50,515 – 51,680
- Stop Loss Level: 46,530
Open your PaxForex Trading Account now and add this currency pair to your forex portfolio.
