Bullish view
- Buy the BTC/USD pair and set a take-profit at 32,100.
- Add a stop-loss at 29,100.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 29,190 and a take-profit at 28,000.
- Add a stop-loss at 31,000
Bitcoin price has been in a strong bullish trend in the past few months as investors reflect on the upcoming actions by the Federal Reserve. It also jumped ahead of the upcoming Shapella upgrade in Ethereum’s network. The pair jumped to a high of 30,500, the highest level since June last year. It has soared by more than 97% from the lowest level in December.
Fed rate pause bets
The main reason for the strong Bitcoin comeback is the upcoming actions by the Federal Reserve. The Fed has been hiking interest rates aggressively in the past few months. It has hiked rates from between 0% and 0.25% to 4.75%. That has been the biggest tightening phase since the Volker era.
Therefore, analysts believe that the Federal Reserve will start pausing interest rates in the coming months. Economists expect that the bank will hike rates by 0.25% in March and then pause hikes for a while to observe the impact of the recent hikes. Historically, Bitcoin does well when the Fed is either cutting interest rates or when it is changing its tune on monetary policy.
Therefore, Bitcoin will react to the upcoming US inflation data scheduled for Wednesday. Red hot inflation numbers, coming a few days after the US published strong jobs number will give the Fed the impetus it needs to deliver more rate hikes. It will also react to the upcoming Fed minutes.
The BTC/USD pair also jumped ahead of the upcoming Shapalla update in Ethereum’s network. In this upgrade, it will be possible for Ethereum stakers to withdraw their tokens for the first time. The concern is that Ethereum could become a focus of the Securities and Exchange Commission (SEC), which views cryptocurrencies with staking features as securities.
BTC/USD chart analysis
On the daily chart, the pair has been in a strong bullish trend in the past few days. It has managed to move above the important resistance level at 29,190, the highest point this year. The pair is also being supported by all moving averages. In fact, the 200-day and 50-day moving averages have made a golden cross pattern. The pair has also moved above the 38.2% Fibonacci Retracement level.
Therefore, the pair will likely continue rising as buyers target the 50% retracement level at 32,080. A move below the support at 28,500 will signal that there are still more sellers.
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