Source: PaxForex Premium Analytics Portal, Fundamental Insight
After reaching 2023 highs in July, Bitcoin has experienced five weeks of quiet selling. Volatility dropped to 2017 lows, pointing towards a potentially bigger move in price action ahead. Before Bitcoin bulls tout their horns, the move can go in either direction and history often repeats itself. In 2017, after Bitcoin bulls pushed prices to fresh peaks, volatility decreased, and prices dropped roughly 50% before resuming their long-term uptrend. A similar pattern could emerge now, with bearish pressures mounting. Outsized moves in Bitcoin and the cryptocurrency market are common, and there is no fresh long-term catalyst to propel Bitcoin higher now.
The 30,000 level will present bulls with significant resistance unless a bullish catalyst emerges that changes the current landscape. The best bullish bet is a deteriorating US Dollar, but with a potential sell-off in equity markets looming, the medium-term outlook for Bitcoin remains bearish. Comments by some US Fed officials about the potential for more interest rate hikes suggests at least two more increase from current levels, but the situation is fluid and could change. Recession risks remain, which could tank the US Dollar, a bullish development for Bitcoin, but also the economy and equity markets, a bearish catalyst. It will continue the present back and forth between bulls and bears, which paves the way for more low volatility price action with a bearish bias. A drift below the Ichimoku Kinko Hyo Cloud, which presently attracts price action, could provide the most notable short-term development and bearish catalyst.
The forecast for the BTC/USD remains cautiously bearish after this cryptocurrency pair retreated from its 2023 peak and drifted lower over the past month. Following the bearish crossover of the Tenkan-sen below the Kijun-sen, both have entered a sideways trend, suggesting a battle between bulls and bears. The Ichimoku Kinko Hyo Cloud confirms the unclear conditions with the Senkou Span B flat, while the Senkou Span A moves higher. Despite the bullish bias in the Ichimoku Kinko Hyo Cloud, price action moved in the opposite direction. Traders should also monitor the CCI after it has lost upside momentum from its breakout above extreme oversold territory. This technical indicator has more downside potential, and a move below -100 could tip the favor into the bearish camp. Can bears maintain control over the BTC/USD and force this cryptocurrency into its horizontal support area from where price action began its rally to 2023 highs? 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 28,760 to 29,285 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 29,050
- Take Profit Zone: 24,720 – 25,820
- Stop Loss Level: 30,150
Should price action for the BTC/USD breakout above 29,285, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 30,150
- Take Profit Zone: 30,740 – 31,770
- Stop Loss Level: 29,285
Open your PaxForex Trading Account now and add this currency pair to your forex portfolio.
