Bullish view
- Buy the BTC/USD pair and set a take-profit at 28,200.
- Add a stop-loss at 26,500.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 26,800 and a take-profit at 25,000.
- Add a stop-loss at 28,200.
The BTC/USD pair held quite well on Wednesday as the recent Bitcoin rally gained steam. The pair rose to a high of 27,420, the highest level since August 30th. It has jumped by more than 10% from the lowest point this month.
Federal Reserve decision ahead
Bitcoin has performed well after bottoming at $24,970 on Monday last week. It has done well even as demand for the coin has remained relatively weak. For example, the volume of Bitcoin traded in key exchanges like Binance and Coinbase has continued falling.
Bitcoin has also risen amid rising inflation risks. The price of crude oil has continued rising in the past few months. Brent jumped to above $95, the highest level in more than eleven months.
Crude oil is one of the most important drivers of inflation globally. Therefore, economists believe that inflation will continue rising in the coming months if oil prices jump above $100.
The next important catalyst for Bitcoin prices will be the upcoming Federal Reserve decision. This decision comes a week after economic numbers revealed that the country’s inflation jumped to 3.7% in August.
Most economists expect the Fed will deliver a hawkish pause. In this, it will likely leave interest rates unchanged between 5.25% and 5.50%. It will then point to further increases later this year if inflation remains sticky.
The alternative is where it hints that it will leave interest rates at the current level for a few more months.
Actions by the Federal Reserve are important for several reasons. For example, high rates lead to higher yields. As such, investors tend to move from risky assets to safe assets like money market funds and short-term bonds. It also has an impact on the US dollar.
BTC/USD technical analysis
The BTC/USD pair has been in a strong upward trend in the past few days. On the 4H chart, the pair has risen to the 50% Fibonacci Retracement level. It has formed an inverted head and shoulders pattern. The 25-period and 50-period moving averages have made a bullish crossover.
Bitcoin has also risen above the key resistance point at 26,860, the highest point on September 14. Therefore, the outlook for Bitcoin is mildly bullish, with the next level to watch being at 28,193, the 61.8% retracement point and the highest point on August 29th.
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