Bitcoin price corrects after hitting a wall at a multi-month descending trendline


On Aug. 15, Bitcoin (BTC) value and the broader market corrected whereas the S&P 500 and DOW appeared to construct on four-straight weeks of sturdy good points. Knowledge from TradingView and CNBC show the Dow pushing by means of its 200-day shifting common, a primary since April 21 and maybe an indication for bulls that the market has bottomed. 

Dow Jones Industrial Common Index (DJI). Supply: TradingView

Whereas equities markets have been strikingly bullish within the face of excessive inflation and a gradual schedule of rate of interest hikes, quite a few merchants worry that the present 32-day uptrend within the DOW and S&P 500 might be a bear market rally.

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This week’s (Aug. 17) launch of minutes from the Federal Open Markets Committee (FOMC) ought to give extra context to the Federal Reserve’s present view of the well being of the USA economic system and maybe make clear the scale of the following rate of interest hike.

For the previous month, overly bullish crypto merchants on Twitter have additionally been touting a story that emphasizes Bitcoin, Ether (ETH) and altcoins promoting off previous to FOMC conferences after which rallying afterward if the set charge aligns with traders’ projected determine.

Someway, this short-term dynamic additionally contributes to traders’ perception that the Fed will “pivot” away from its financial coverage of curiosity hikes and quantitative tightening after “inflation peaks.” This can be a considerably worthwhile commerce for savvy day-traders, nevertheless it’s essential to notice that inflation is at the moment at 8.5% and the Fed’s goal is 2%, which is kind of aways to go.

In the end, Bitcoin value maintains a excessive correlation to the S&P 500 so traders could be sensible to keep away from tunnel vision-like narratives that align with their bias and control the efficiency of equities markets.

Bitcoin sells-off at a multi-month trendline resistance

Over the weekend, Bitcoin made a powerful transfer at a multi-month descending trendline and broke by means of the $24,000 stage, following a path that many merchants anticipated would set off an upside transfer and the VPVR hole fill to the $28,000 to $29,000 stage.

Dealer Cheds said “BTC actually appeared prefer it was going to go final evening” however the promoting at resistance created an “outdoors bar” the place “the prior development was challenged” and based on Cheds, this can be a signal that “the development could also be stalling and be on the look out for indicators of additional weakening.”

Pseudonymous dealer “Huge Smokey” appeared to concur {that a} “strong directional move” might be on the playing cards, citing tightening within the Bollinger Bands and individually within the Tremendous Guppy indicators as Bitcoin value drew near the multi-month descending trendline.

In a separate chart, Huge Smokey suggested that if the descending trendline is damaged, Bitcoin might see “a 26% pop to $28K earlier than extra sideways chop,” leading to an eventual retest of the $24,000 stage.

After hitting related overhead resistance ranges, most altcoins additionally adopted Bitcoin’s lead by posting single-digit losses, however those who have been flashing bottoming alerts are nonetheless rounding out with what look like reversal patterns.

AVAX, FTM and SOL day by day chart. Supply: TradingView

Associated: Shiba Inu eyes 50% rally as SHIB price enters ‘cup-and-handle’ breakout mode

Each canine has its day

Curiously, on Sunday (Aug. 14) in style merchants on Crypto Twitter prophesied that the sharp good points from meme tokens like Shiba Inu (SHIB) and Dogecoin (DOGE) have been a transparent signal that the bull phase was over-extended and en path to a correction.

In the end, after a 130% and 42.5% rally from Ether and BTC, every was poised for a little bit of revenue taking, particularly at resistance. Open Curiosity on each property stays close to all-time highs, however what it is going to take to set off BTC to breakout or breakdown on the multi-month descending trendline is unknown.

Maybe a 1% charge hike, stiffer crypto laws or a shock turn-around in equities markets might ship value tumbling again towards yearly lows. Alternatively, a profitable Ethereum Merge might be a optimistic catalyst that triggers a excessive quantity surge above Bitcoin’s key resistance stage.

The views and opinions expressed listed here are solely these of the writer and don’t essentially replicate the views of Each funding and buying and selling transfer includes danger, it is best to conduct your individual analysis when making a call.