Bearish view
- Sell the BTC/USD pair and set a take-profit at 18,000.
- Add a stop-loss at 21,000.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 20,500 and a take-profit at 22,000.
- Add a stop-loss at 19,000.
The BTC/USD price moved sideways and remained under intense pressure as the US dollar rally continued and global risks rose. The pair remained solidly below the important support level of 20,000. According to CoinGecko, most cryptocurrency prices have dropped, bringing the total market cap to slightly above $1 trillion.
Global risks are elevated
BTC/USD price has struggled recently as global risks remain at an elevated level. First, there is a major risk that the global economy will go through a contraction in the second half of the year. For example, data published on Monday revealed that the composite PMI in the UK and Europe moved below the expansion zone of 50 in August.
PMI numbers from countries like China and the US have been relatively weak in the past few months. At the same time, a major drought is happening in the northern hemisphere. Additionally, the crisis in Ukraine shows no signs of ending while another one in Taiwan could start in the coming months.
All these risks are happening at a time when inflation in most countries has surged to the highest level in decades. In Europe, inflation rose to an all-time high in August and the situation will worsen now that Russia has stopped selling gas to European countries.
All these events have had a major impact on the financial market. Most stock indices like the Dow Jones, Nasdaq 100, and DAX have al pulled back lately. Key commodities like silver, gold, and palladium have also declined. Bitcoin and other cryptocurrencies have a close correlation with American equities.
Meanwhile, these risks have led to a strong US dollar. The dollar index surged to a multi-decade high as investors anticipate more rate hikes by the Fed. Most analysts expect that the Fed will hike by either 0.50% or 0.75% this month. BTC has an inverse relationship with the US dollar.
BTC/USD forecast
The four-hour chart shows that the BTC/USD pair has been in a tight range in the past few days. In this period, the pair has struggled to move below the important support level at 19,521. It has moved below all moving averages and the important resistance level at 20,733.
Therefore, the pair will likely have a bearish breakout as sellers target the next key support level at 18,000. A move above the resistance level at 21,000 will invalidate the bearish view.
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