Bullish View
- Buy the BTC/USD pair and set a take-profit at 44,000.
- Add a stop-loss at 40,000.
- Timeline: 1-3 days.
Bearish View
- Sell the BTC/USD pair and set a take-profit at 40,000.
- Add a stop-loss at 43,000.
The BTC/USD pair made strong gains during the weekend as the mood in the market improved after the strong Amazon earnings. The pair crossed the important resistance level at 40,000 for the first time since January 20th.
Bitcoin and Stocks Correlation
A common theme that has emerged in the market is the fact that cryptocurrency prices like Bitcoin and stocks have a close correlation. In most periods, Bitcoin tends to rise when stocks, especially the Nasdaq 100, rise.
For example, the weekend rally of BTC can be attributed to the fact that the Nasdaq 100 index rallied by 220 points on Friday. The rally came as investors reacted to the strong quarterly results by Amazon. The company’s revenue rose to more than $137 billion in the fourth quarter while its profitability also rose even as costs jumped.
The pair also rose after the strong jobs data from the United States. The numbers showed that the economy created more than 467k jobs in January and over 500k in December.
In theory, strong economic numbers from the US should be a bad thing for BTC/USD pair because it raises the possibility that the Federal Reserve will be more aggressive when it comes to hiking interest rates in March.
Another thing that could push the Fed to hike rates at a faster pace is the performance of the bond market. The yield on the 30-year Treasury Inflation-Protected Securities (Tips) rose above zero on Friday. This is an important number that is often seen as a proxy for real yields. As such, the data shows that the Fed could hike rates without leading to a slow economic growth.
The BTC/USD performance is potentially an indication that analysts expect that the crash has been overdone.
BTC/USD Forecast
The four-hour chart shows that the BTC/USD pair has been in a bullish trend in the past few days. The pair managed to move above the key resistance at 39,378, which was above the upper side of the ascending channel. It has also moved slightly above the 25-day and 50-day moving averages while the Stochastic Oscillator has moved slightly above the neutral level.
Therefore, the pair will likely keep rising as investors target the 61.8% Fibonacci retracement level at 44,772, which was also the highest level since January 5th. On the flip side, a drop below the support at 40,000 will invalidate this view.
