This is a technical analysis article written by CoinDesk Analyst and Certified Market Technician Omkar Godbole.
The Fed has come and gone without moving the needle on Bitcoin price significantly. The central bank cut rates by 25 basis points as expected, but reportedly issued hawkish forward forecasts. However, the dollar has been sold off.
Amid all this, BTC continues to annoy traders with its directionless price action.
The picture on the daily price chart remains largely unchanged from before the Fed, with prices still stuck in this counter-trend mini-up channel within a broader downtrend.
Any seasoned technical trader would tell you that the playbook is now simple. If we cross the downtrend line, it indicates that the downtrend from the record high has ended. On the other hand, if we dip below the mini ascending channel, it reinforces the broader downtrend, potentially leading to larger losses.
In which direction will he go? At the time of writing, the bullish case looks attractive, as the MACD histogram, with parameters set at (50,100,9) to assess the medium and long term, is about to cross above zero (flashing green signal). Positive MACD crossovers indicate further bullish momentum.
The dollar index, one of BTC’s main foes, has been hit hard since the Fed meeting, undermining the central bank’s supposedly hawkish tone. The DXY fell to 98.13 on Thursday, its lowest level since October 17 and was last seen at 98.36. A weaker dollar bodes well for risky assets, including cryptocurrencies.
More importantly, the MACD histogram of the DXY has turned negative, indicating a bearish momentum shift.
The Nasdaq has found its footing after November’s decline and is now trading above the widely followed 50-, 100-, and 200-day simple moving averages, offering bullish signals for the crypto market. Finally, BTC sellers appear to be running out of steam as prices continue to hold steady despite reports that the US Senate crypto market’s bullish structure has hit a roadblock.
If BTC prices break out, several resistance levels between $97,000 and $108,000, identified by the 50, 100, and 200-day simple moving averages (SMA) and the Ichimoku cloud, would become visible.
That said, ETF flows remain a concern. As reported on Thursday, there hasn’t been a single day of net inflows exceeding $500 million in the past month. While prices have stabilized since November 20, cumulative net inflows since the last week of November total just $219 million, according to SoSoValue data. This is a paltry figure compared to the billions of redemptions observed in October and early November.
While the Nasdaq trading above its key averages is good news for BTC bulls, the cryptocurrency’s correlation with the tech index has become unbalanced. Bitcoin falls more sharply when the Nasdaq falls, but rises only modestly during Nasdaq rallies.
We therefore cannot completely rule out a possible BTC bear case, implying a breakdown below the mini ascending channel. Such a move would expose support around $80,000.
