Bullish view
- Buy the BTC/USD pair and set a take-profit at 45,500.
- Add a stop-loss at 42,000.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 43,000 and a take-profit at 41,000.
- Add a stop-loss at 45,500.
Bitcoin price rally started showing signs of exhaustion as traders waited for the upcoming Fed decision. The BTC/USD pair continued to consolidate at 43,500 on Wednesday morning after it made a strong rally from last week’s low of 38,500.
Bitcoin rally stalls
January has been a mixed month for Bitcoin. The coin jumped to a multi-year high of $49,000 after the SEC gave the green light for eleven spot ETFs. This was an important move because it took Bitcoin mainstream and made it available to institutional investors.
Bitcoin then retreated sharply as investors sold the ETF news. It moved from $49,080 to a low of $38,500 also as many investors in Grayscale Bitcoin Trust (GBTC) liquidated their assets and moved to cheaper alternatives. Some Bitcoin ETFs like Bitwise and Ark Invest charge no fees for the first six months.
Looking ahead, the next important news that could move Bitcoin will be the upcoming FOMC decision. In its first meeting, the Fed will set the tone for what to expect in the next few meetings now that the economy is doing well.
I suspect that the Fed will tweak its language from its December meeting. In its last monetary policy meeting, the bank decided to leave interest rates unchanged. It then hinted that there will be three cuts this year.
Now that inflation remains stubbornly high and the economy is doing well, officials may tweak that language. If this happens, the hawkish tone will likely lead to more downside for Bitcoin and other risky assets.
The other important data to watch this week will be the ADP jobs report set for Wednesday and the official NFP data scheduled for Friday. These numbers will help the Fed make its next decisions. On Tuesday, the JOLTs report showed that the number of vacancies jumped to over 8 million in November.
BTC/USD technical analysis
The 4H chart shows that the BTC/USD pair has been in a strong uptrend in the past few weeks. It has already moved comfortably above the Woodie pivot point at 41,350 and is now approaching its first resistance point. The pair has also risen above the 50-period Arnaud Legoux Moving Average (ALMA).
Bitcoin’s Relative Strength Index (RSI) has moved above the overbought point. Therefore, the outlook for the pair is bullish, with the next point to watch being the psychological point at 45,000.
Ready to trade our free Forex signals? Here are the best MT4 crypto brokers to choose from.