This post was originally published on this site.
FUNDAMENTAL OVERVIEW
Bitcoin dropped
all the way back to the key $76,000 support level, as first the strong US NFP
report and later the surge in oil prices increased Fed rate hike expectations.
This week has been
all about the tensions in the Middle East. The escalation in attacks between US
and Iran, and Yemen’s Houthis attacks on Saudi energy facilities, provided a
tailwind for oil prices to push into new highs.
The momentum then
increased as traders started to price in a prolonged conflict after Trump
said that he expects the war with Iran to end immediately after the US
midterm elections in November, effectively acknowledging that the war is
likely to continue through at least the election period.
Yesterday, WTI
crude oil broke through the psychologically important $100 level and
triggered a hawkish repricing in interest rate expectations across the board.
Today, the focus will be on the Core CPI M/M measure,
as that’s what the Fed members have been focusing on. Fed’s Waller recently
said that he would consider a rate hike in September if the monthly core
reading surprised to the upside. Unfortunately, that was before the latest
surge in oil prices.
Traders are now pricing in a 67% chance of a rate hike
at the upcoming meeting. I feel like an in-line CPI won’t be enough to steer
the market away from expecting a rate hike. If we go into the FOMC meeting with
higher probabilities for a rate hike, then the Fed will be forced to hike just
to avoid delivering a dovish surprise.
In light of this, I think only a soft Core CPI could
give Bitcoin a boost in the short-term, while an upside surprise might
exacerbate the risk-off sentiment and trigger a selloff, as the market could
start pricing an even more aggressive path for rate hikes.
BITCOIN TECHNICAL
ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that Bitcoin rejected the 82,500 resistance and pulled all the way back to
the key 76,000 support. We can expect the buyers to step in around the support
with a defined risk below it to position for a rally back into the resistance.
The sellers, on the other hand, will want to see the price breaking lower to
increase the bearish bets into the 67,000 support next.
BITCOIN TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we have
a downward trendline defining the recent bearish momentum. If the price pulls
back into the trendline, we can expect the sellers to lean on the trendline
with a defined risk above it to target a break below the support. The buyers,
on the other hand, will want to see the price breaking higher to increase the
bullish bets into the resistance.
BITCOIN TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we
have a minor resistance zone around the 77,600 level. This is where we can
expect the sellers to step in with a defined risk above the resistance to keep
pushing into new lows. The buyers, on the other hand, will look for a break
higher to extend the pullback into the trendline.
UPCOMING CATALYSTS
Todayall eyes will be on the US CPI
report.
This article was written by Giuseppe Dellamotta at investinglive.com.
