Bearish view
- Sell the BTC/USD pair and set a take-profit at 38,120.
- Add a stop-loss at 43,000.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 41,500 and a take-profit at 43,000.
- Add a stop-loss at 40,000.
Bitcoin price retreated in the overnight session as the recent bullish momentum faded. The BTC/USD pair dropped to a low of 40,120, its lowest point since December 4th. It has crashed by more than 8% from its highest point this week.
Federal Reserve decision ahead
Bitcoin has been in a strong bullish trend this year as it jumped from less than $20,000 to over $40,000 today. It has risen because of three key reasons, including hopes of interest rate cuts by the Fed, upcoming Bitcoin halving, and the potential for a spot Bitcoin ETF.
Now, there are signs that the Fed will not cut interest rates as early as expected. On Friday, the US published strong jobs numbers, which showed that the unemployment rate dropped to 3.7% in November. The economy added over 190k jobs in November.
The US published relatively strong consumer inflation data. According to the BLS, the headline Consumer Price Index (CPI) rose from 0.0% in October to 0.1% in November. It dropped from 3.2% to 3.1% on a YoY basis.
On the other hand, core inflation rose slightly from 0.2% to 0.3%. It remained unchanged at 4.0%, double the Fed’s target of 2.0%. Therefore, these numbers mean that the country’s inflation is not falling as fast as expected.
The next important Bitcoin catalyst will be the upcoming Federal Reserve decision. After the latest jobs and inflation numbers, economists believe that the bank will decide to leave rates unchanged.
Jerome Powell, the bank’s chair, is expected to push back against the rising hopes of interest rate cuts in the near term. Some economists have been pricing in a 0.25% rate cut in the March meeting., which explains why the coin jumped.
BTC/USD technical analysis
Bitcoin has retreated sharply in the past few days. It has moved from the year-to-date high of $44,910 to about $40,000. The BTC/USD pair has also dropped below the 50-period moving average. The Relative Strength Index (RSI) and the Stochastic Oscillator have all pointed downwards.
Bitcoin has dropped below the first support of the Woodie Pivot point. Therefore, the outlook for the pair is bearish, with the next point to watch being at 38,125, the second Woodie pivot. The stop-loss of this trade is at 43,000.
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