‘Only Up’ Bitcoin and Ethereum are taking a breather after meeting resistance at a tough multi-month downtrend line.
Bitcoin August 15
The price and the broader market improved as the S&P 500 and the DOW posted strong gains for four consecutive weeks. Data from TradingView and CNBC shows that the Dow Jones is pushing its 200-day moving average for the first time since April 21, possibly a sign that the bulls have bottomed out in the market.
Dow Jones Industrial Average (DJI). Source: Trading View
Equity markets rose sharply amid high inflation and a stable schedule for higher interest rates, with some traders fearing that the current 32-day uptrend in the DOW and S&P 500 could become a bear market rally.
The Federal Open Market Committee (FOMC) minutes released this week (August 17) should provide more insight into the Federal Reserve’s current view of the US economy and possibly shed light on the scope of the next rate hike. .
Over the past month, top crypto traders on Twitter have also started talking about bitcoin and ether.
and altcoins are sold before FOMC meetings and then rise if the set rate matches the predicted number of investors.
However, this short-term momentum also contributes to investor confidence that the Fed will “come back” after raising the monetary rate and quantitative tightening after “peak inflation”. This could be a somewhat profitable trade for knowledgeable intraday traders, but it is important to note that inflation is currently at 8.5% and the Fed’s target of 2% is far from the limit.
Ultimately, the price of bitcoin maintains a high correlation with the S&P 500, so investors would be wise to avoid tunnel vision-like narratives associated with their biases and keep an eye on the performance of the stock markets.
Bitcoin sells at multi-month trend line resistance
Over the weekend, Bitcoin made a strong move on several monthly downtrend lines, breaking the $24,000 level, following a path that many traders predict will trigger an upward move, with the VPVR gap reaching $28,000-$29,000.
“Bitcoin did look like it was about to go out last night,” trader Chads said, but selling at the resistance level has created an “outside bar” where “the previous trend has been challenged” and, according to Chads, is a sign that “this is could be a trend.” Watch for signs of slowing down and further weakening.”
A trader nicknamed “Big Smokey” appeared to agree that there could be “strong directional movement” on the charts, citing Bollinger Bands and individual Super Guppy indicators tightening as bitcoin’s price nears its multi-month down trendline.
On a separate chart, Big Smoky suggested that if the downtrend line is broken, Bitcoin “could rise 26% to $28,000 before further sideways breakout” and eventually retest the $24,000 level.
Having reached similar general resistance levels, most altcoins have also followed Bitcoin’s lead by posting single digit losses, but those with flashing bottom signals are still rolling with what appears to be a reversal pattern.
Daily chart of AVAX, FTM and SOL. Source: Trading View
Related: Shiba Inu sees 50% rally as SHIB price enters ‘get it’ breakout mode
Every dog has his day
Interestingly, on Sunday, August 14, popular crypto twitter traders predicted a surge from meme tokens like Shiba Inu.
This was a clear sign that the bullish phase was overextended and on the way to a correction.
Ultimately, after Ethereum and BTC surged 130% and 42.5%, everyone was ready to take some profits, especially on resistance. Open interest in both assets remains close to all-time highs, but it is unknown what it will take for BTC to break or collapse on the multi-month downtrendline.
Perhaps a 1% rate hike, tighter regulation of cryptocurrencies, or a sudden turn in the stock markets could send prices back to yearly lows. Alternatively, a successful Ethereum consolidation could be a positive catalyst, causing a lot of volume to rise above Bitcoin’s key resistance level.
The views and opinions expressed here are those of the author only and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, so you should do your own research when making a decision.