Bitcoin: Death's Knell for Bears? Technical Outlook, Edition #185 (10/02/2022)
Something's about to go down in Bitcoin... Read on for the latest technical analysis and chart updates from Qluster Research 👇
US Dollar under siege, Golden Cross forming
A meme-esque 'Golden Cross' appears to be forming on the daily (D1) Bitcoin chart.
Read Q’s past coverage of the Golden Cross 👇
Observe the formation outlined below as prices consolidate around USD 44K.
The breakout formation occurs when the 20-day exponential moving average (D1 20 EMA, GREEN) breaks above the 50-day moving average (D1 50 MA, RED)—and is generally considered bullish in nature.
A 'Death Cross' is simply an inversion of its golden relative for those unaware. In other words, the Death Cross refers to a situation where the D1 20 EMA falls below the D1 50 MA.
Bitcoin, $BTC - Daily (D1)
Upon closer inspection, a view of the 4-hour (H4) BTC/USD chart reveals prices using the H4 20 EMA as support.
Note that price action looks to have now run into some sloped resistance.
Bitcoin, $BTC - 4 Hour (H4)
A forecast of this breakup to the .382 Fib retracement zone is outlined below.
This depiction is presented alongside a breakdown to the .236 Fib level.
Qluster analysts remark on a perceivably neutral consolidation pattern, particularly as no clear higher highs or lower lows have been set.
While some may argue that Bitcoin is due to cool off, it is important to recognise that the US Consumer Price Index is scheduled for release imminently—tonight at 12:30 AM AEST.
As such, the actual month-to-month inflation figure is bound to result in some price volatility.
On a side note, what surprised the Qluster Research team was how the market interpreted the recent United States Non-Farm Payrolls (NFP), which came out skewed bullish.
Astonishingly, the US economy added around 467K payrolls in January 2022—which is triple the forecasted value of 150k…
This might be interpreted as a sign that the US economy is back to strength.
If that wasn't surprising enough, the US Dollar Currency Index ($DXY) saw a sudden drop after such an overwhelmingly bullish NFP announcement.
Recent happenings are peculiar, which warrants further lines of questioning from technical analysis.
US Dollar Currency Index, $DXY - Daily (D1)
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Q’s Conclusion
Should the US CPI come out bullish—i.e. high inflation—with the $DXY falling again, then the strain on markets could be over.
Assuming it comes out higher places a greater chance for an aggressive rate hike (0.5%) next month.
For those who don't know, an aggressive rate hike (possibly priced in already) would attract speculators to hold the US Dollar instead of chasing yields in the market.
While one rate change should not ruffle many feathers, a few consecutive aggressive hikes might do the trick.
It's a game of cat and mouse now…
See you again for the next update.
- q
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