Bullish view
- Set a buy-stop at 23,200 and a take-profit at 24,500.
- Add a stop-loss at 21,200.
- Timeline: 1 day.
Bearish view
- Sell the BTC/USD pair and set a take-profit at 21,000.
- Add a stop-loss at 23,500.
The BTC/USD crawled back during the American and Asian sessions even after the hawkish decision by the Federal Reserve. Bitcoin retested the important resistance level at $23,000, which was still about 10% below the highest point last week.
Fed rate decision and US earnings
The Federal Reserve concluded its two-day meeting on Wednesday and did what most analysts were expecting. The bank decided to hike interest rate by another 0.75%, bringing its year-to-date hike increase to 225 basis points. The dot plot revealed most officials expect the rate hike cycle will continue in the coming months.
The Fed is facing the challenge of lowering inflation without causing a recession. Data published this month showed that the headline consumer price index (CPI) rose to 9.1% in July, which was the highest point in over 4 decades.
Excluding the volatile food and energy products, inflation rose by almost 6%. Historically, risky assets like Bitcoin and stocks tend to underperform in a period when the Fed is extremely hawkish.
The BTC/USD pair rebound coincided with the cautious comeback of American stocks. The Dow Jones, Nasdaq 100, and S&P 500 indices rose even after earnings by big-tech companies like Alphabet and Microsoft missed analysts’ forecasts.
Most companies have published weak results. According to FactSet, companies have published the slowest earnings growth since 2020. Still, investors believe that the earnings are not as bad as expected. In the past few weeks, there have been a close correlation between stocks and cryptocurrencies.
Meanwhile, on-chain data show that exchanges are seeing higher demand in the past few days as investors buy the dip. There is a sense that Bitcoin and other cryptocurrency prices have seen their worst period this year.
BTC/USD forecast
The four-hour chart shows that the BTC/USD pair rose to a high of 24,318 last week. This was the highest point since June 13th. This week, the situation faded, which saw the price drop to about 20,733. It has moved above the 25-day and 50-day moving averages and is slightly above the lower side of the ascending channel. It has also formed a head and shoulders pattern.
The Relative Strength Index (RSI) has moved from the oversold level to 62. The pair will likely continue rebounding as buyers target last week’s high of 24,320.
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