Source: PaxForex Premium Analytics Portal, Fundamental Insight

After Bitcoin entered a counter-trend rally following its breakdown below the psychologically important support level of 30,000, bullish momentum is once again weakening. The rally was inspired after reports suggested Amazon plans to accept Bitcoin payments. Amazon was quick to respond that while interest in cryptocurrencies and the underlying Blockchain technology exists, it will not be until at least 2022 until it would consider it. Traders should prepare for more weakness and volatile trading ahead.

Over the past few trading weeks, Bitcoin settled into a range between 30,000 and 40,000. Regulatory pressures and uncertainty could result in a downward adjustment of this range between 20,000 and 30,000 over the next few weeks. The US infrastructure bill includes a provision forcing disclosure on trades of digital assets exceeding $10,000. While Bitcoin traders remain split on disclosure rules, uncertainty remains in place. A sell-off in global equity markets remains another threat to Bitcoin. With Covid-19 infections in the US exceeding levels seen in 2020, traders should prepare for volatility with a bearish bias.

The forecast for the BTC/USD remains bearish in the short term after this cryptocurrency pair reversed its previous sell-off into its Ichimoku Kinko Hyo Cloud, which carries a strengthening bearish bias. While the Kijun-sen remains flat, the Tenkan-sen shows a minor uptrend, suggesting volatility may rise before the next move to the downside. Adding to breakdown pressures is the CCI after moving out of extreme overbought territory with plenty of downside potential. Can bears pressure the BTC/USD into an extension of its sell-of until it can challenge its next 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 36,750 to 39,700 zone, PaxForex recommends the following trade set-up:

• Timeframe: D1           
• Recommendation: Short Position
• Entry Level: Short Position @ 38,030
• Take Profit Zone: 22,615 – 24,075
• Stop Loss Level: 41,250

Should price action for the BTC/USD breakout above 39,700, PaxForex recommends the following trade set-up:

• Timeframe: D1           
• Recommendation: Long Position
• Entry Level: Long Position @ 41,250
• Take Profit Zone: 44,560 – 47,210
• Stop Loss Level: 39,700

Open your PaxForex Trading Account now and add this currency pair to your forex portfolio.