Bearish View
- Sell the BTC/USD and add a take-profit at 53,000 (lowest level on 5th May).
- Set a stop-loss at 56,000.
- Timeline: 1-2 days.
Bullish View
- Set a buy stop at 56,000.
- Add a take-profit at 57,000 and a stop-loss at 55,000.
The BTC/USD retreated during the American session as risky assets sold-off. The Bitcoin price declined from the weekend high of $59620 to a low of $53,956. According to CoinMarketCap, the currency has a market capitalization of more than $1 trillion.
Bitcoin Price Retreats
The BTC/USD declined even after the market conditions improved. For example, on Friday, data by the US Bureau of Labour Statistics (BLS) showed that the economy added significantly fewer jobs than expected. While this was not good news, it was good for risky assets since it meant that the Fed will likely not tighten policy soon.
Risky assets like cryptocurrencies and technology stocks tend to do well in a period of low interest rates. In fact, the NASDAQ 100 Index dropped for the third straight day on Monday and its futures are pointing lower.
Bitcoin is therefore focusing on three key events. First, a number of Federal Reserve officials will talk today. They include Lael Brainard, Raphael Bostic, and John Williams. Since these are members of the Federal Open Market Committee (FOMC), their statements on monetary policy will have an impact.
The currency will also react to the upcoming US inflation numbers that will come out tomorrow. The data come at a time when the price of most items is going upwards. For example, lumber prices have more than quadrupled while other commodities like copper and iron ore have surged to an all-time high. Most importantly, international and local shipping costs have surged.
Therefore, if the data show that inflation is rising faster than estimates, it could mean that the Fed will tighten sooner. This, in turn, will be bad for the BTC/USD pair. Still, in the past meeting, the bank reiterated that the current rise of consumer prices was temporary. Finally, Bitcoin prices will react to the US retail sales numbers that will come out on Friday this week.
BTC/USD Forecast
The two-hour chart shows that the BTC/USD recent drop was inevitable. The currency found a substantial resistance slightly below the $60,000 level. It also formed a rising wedge pattern, which is usually a bearish sign. The pair also moved below the short and longer-term moving averages and the 50% Fibonacci retracement. Therefore, there is a possibility that the pair will continue falling as bulls target the next key support at $53,000. However, a move above the 50% retracement level at 55,350 will invalidate this trend.
