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

0
88
Advertisement

While equity markets have been surprisingly bullish in the face of high inflation and a steady schedule of interest rate hikes, several traders fear that the current 32-day uptrend in the DOW and S&P 500 could be a rebound from the bear market.

The release of this week’s (August 17) minutes from the Federal Open Markets Committee (FOMC) should give more context to the Fed’s current view on the health of the US economy. and perhaps shed light on the size of the next interest rate hike. .

Over the past month, overly optimistic crypto traders on Twitter have also been promoting a narrative emphasizing Bitcoin, Ether (ETH), and altcoins selling ahead of FOMC meetings and then rallying if the set rate lines up with the projected number of investors.

In some ways, this short-term dynamic also contributes to investors’ belief that the Fed will move away from its monetary policy of interest hikes and quantitative tightening after “inflation spikes.” This can be a somewhat profitable trade for savvy day traders, but it is important to note that inflation is currently running at 8.5% and the Fed’s target is 2%, which is quite a ways off.

Ultimately, the price of Bitcoin maintains a high correlation with the S&P 500, so investors would do well to avoid tunnel vision-like narratives that align with their bias and keep an eye on the performance of equity markets.

Bitcoin Selloff at Multi-Month Trendline Resistance
Over the weekend, Bitcoin made a strong move on a multi-month downtrend line and broke above the $24,000 level, following a path that many traders anticipated would trigger a move higher and the VPVR gap fill to the $24,000 level. $28,000 to $29,000.

Trader Cheds said that “BTC really looked like it was going to die last night” but selling at resistance created an “outer bar” where “the previous trend was defied” and according to Cheds, this is a sign that “the trend it may be stagnation and watch for signs of further weakening.”

The pseudonymous trader “Big Smokey” seemed to agree that there could be a “strong directional move” on the charts, citing a tightening in the Bollinger Bands and, separately, in the Super Guppy indicators as the price of Bitcoin it was approaching the multi-month downtrend line.

In a separate chart, Big Smokey suggested that if the downtrend line is broken, Bitcoin could see “a 26% surge to $28K before more sideways cuts,” resulting in an eventual retest of the $24,000 level. .

After reaching similar upper resistance levels, most altcoins also followed Bitcoin’s lead in posting single-digit losses, but those that were showing signs of bottoming are still completing what appear to be reversal patterns.

AVAX, FTM and SOL daily chart. Source: TradingView
Related: Shiba Inu eyes 50% rally as SHIB price enters ‘cup and handle’ breakout mode

Every dog ​​has his day
Interestingly, on Sunday (Aug 14) popular traders on Crypto Twitter prophesied that strong gains in meme tokens like Shiba Inu (SHIB) and Dogecoin (DOGE) were a clear sign that the bullish phase was overextended and on. way to a fix.

Advertisement

LEAVE A REPLY

Please enter your comment!
Please enter your name here