Bullish View
- Set a buy stop at 40,000 (psychological level).
- Add a take-profit at 43,000 (38.2% retracement).
- Set a stop-loss at 36,000.
Bearish View
- Set a sell-stop at 36,000 and a take-profit at 33,000.
- Add a stop-loss at 38,000.
The BTC/USD pair declined sharply during the Asian session as investors rushed to take profit. Bitcoin is trading at $37,350, which is 8.67% below the highest level this week.
Bitcoin Retreats
The Bitcoin price staged a major rally this week after last week’s turmoil. At its peak, the currency was up by more than 37% above its lowest level last week.
BTC is falling, in part, because of the stronger US dollar. The US Dollar Index has jumped by more than 0.10% as investors wait for the latest personal consumption expenditure (PCE) data that will come out tomorrow. This is an important figure that points to inflation in the country. Analysts expect that the data will show that the PCE jumped to the highest level in more than a decade because of the recent stimulus.
The pair is also falling ahead of the latest US GDP and initial jobless claims numbers. The second reading is expected to show that the economy expanded by 6.5% in the first quarter. The initial jobless claims numbers are expected to show that initial claims declined to 425,000 last week.
All these numbers are important because they provide sentiment on the economy and how the Federal Reserve will react. While the Fed has insisted that it will not tighten, there is a possibility that excellent results will see it start to change its outlook. Indeed, the 10-year bond yield has jumped by 40 basis points to 1.581 while the 30-year has risen to 2.264%.
The BTC/USD has also retreated because of profit-taking after the currency surged by more than 36% from its lowest level last week.
BTC/USD Technical Analysis
The four-hour chart shows that the BTC/USD staged an impressive recovery after it crashed to a multi-month low last week. The pair rose and retested the important resistance level at 40,000 and moved above the 23.6% Fibonacci retracement level. It is also at the same level as the 25-day and 15-day exponential moving averages (EMA). In addition, the pair seems to be forming an inverted head and shoulders pattern, which is usually a bullish signal. It has also formed a bullish flag pattern.
Therefore, there is a possibility that the pair will resume the upward trend as bulls target the next resistance at 43,174, which is at the 38.2% retracement level. However, a drop below 36,000 will invalidate this prediction.
