BTC/USD Forex Signal: Bitcoin Ripe for Breakout

Crispus Nyaga

With the triangle pattern approaching its tip, there is a possibility that the pair will soon have a bullish or bearish breakout.

Bullish View

  • Set a buy-stop at 39,000 and a take-profit at 41,000.
  • Add a stop-loss at 37,000.
  • Timeline: 1-2 days.

Bearish View

  • Set a sell-stop at 36,400 and a take-profit at 34,000.
  • Add a stop-loss at 39,000.

The BTC/USD pair is in a tight range as the consolidation in the cryptocurrencies continues. The pair is trading at 37,373, where it has been trading in the past few weeks. Other cryptocurrencies like Ether and Cardano are also in a tight range, while Dogecoin jumped by more than 20% after Coinbase confirmed it will add it to Coinbase Pro.

Bitcoin Consolidation Continues

The BTC/USD has struggled to find direction in the past few days after it crashed to a multi-month low in May. There are two reasons why this has happened.

First, investors are worried about regulations in the cryptocurrencies sector as the number of ransomware attacks rise. For example, in May, Russian hackers managed to halt the Colonial Pipeline that carries more than 3 million barrels of oil every day. This week, they managed to hack JBS, the leading meat processor in the country. Therefore, there are concerns that the Joe Biden administration will increase their regulations in the sector.

Second, the BTC/USD has struggled as investors worry about interest rates in the United States. This is after recent data showed that inflation has surged while the labor market is tightening. In April consumer prices rose by 4.2% while the personal consumption expenditure (PCE) rose to the highest level in almost three decades. On Thursday and Friday, the US is also expected to publish strong jobs numbers. Therefore, there is a possibility that the Fed will start changing its language on monetary policy in the near term. A tighter monetary policy is often seen as being negative for Bitcoin.

Third, there are concerns about the energy used to mine Bitcoin. Many institutional investors will likely continue staying on the sidelines since a substantial number of Bitcoins are mined using fossil fuels. These days, most institutional investors are allocating funds to companies that have an ESG component.

BTC/USD Technical Analysis

The four-hour chart shows that the BTC/USD pair is in a tight range. It is trading at the same range as the 25-day and 15-day moving averages. It has also formed a symmetrical triangle pattern while the Relative Strength Index (RSI) has formed a bullish divergence pattern. The pair is also stuck at the 23.6% Fibonacci retracement level. Therefore, with the triangle pattern approaching its tip, there is a possibility that the pair will soon have a bullish or bearish breakout.

BTC/USD

Crispus Nyaga
Crispus Nyaga is a financial analyst, coach, and trader with more than 8 years in the industry. He has worked for leading companies like ATFX, easyMarkets, and OctaFx. Further, he has published widely in platforms like SeekingAlpha, Investing Cube, Capital.com, and Invezz. In his free time, he likes watching golf and spending time with his wife and child.

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