There is a likelihood that Bitcoin will break out lower in the coming days.
Sell the BTC/USD pair and set a take-profit at 48,000.
Add a stop-loss at 52,000.
Timeline: 2 days.
Set a buy-stop 52,000 and a take-profit at 54,000.
Add a stop-loss at 50,000.
The BTC/USD pair retreated slightly in the overnight session as the bullish momentum faded. The pair is trading at 50,388, which is a few points below this week’s high of 52,000. Still, the price is about 20% above the lowest level last week.
Bitcoin declined sharply during the weekend. This crash coincided with the overall decline of the tech-heavy Nasdaq 100 index as investors remained concerned about inflation and a tighter monetary policy.
The situation changed this week as investors rushed to buy the dip. The price has jumped by about 20% as the Fed worries softened. It also bounced as investors concerns about the Omicron variant waned. Recent data shows that the new variant is relatively mild than Delta.
Also, early results showed that a drug by GlaxoSmithKline could treat the variant. Therefore, most assets rallied this week. Global stocks recovered sharply, with the S&P 500 being a few points below its all-time high. There is usually a close correlation between Bitcoin and US equities.
The BTC/USD also retreated as investors watched the litigation between Craig Wright and David Kleiman. Craig has long insisted that he was the founder of Bitcoin. In the lawsuit, Kleiman accused Wright of owing him half of 1.1m bitcoins. Wright won the case and insisted that he was the founder of Bitcoin. He now runs Bitcoin SV, a cryptocurrency that emerged from a Bitcoin Cash hard fork.
Looking ahead, the next key thing to watch will be the upcoming US inflation numbers that are scheduled for Friday this week. Analysts expect the data to show that the country’s inflation jumped sharply in November. As such, if the numbers are right, it means that the Fed will follow through its pledge to tighten more when it meets next week.
The strong BTC/USD rebound has faded in the past few hours. It is trading at 50,388, which is about 3% below its highest level this week. The retreat started when the pair tested the 38.2% Fibonacci retracement level at 52,202. Now, it is still slightly below the 50-day moving average while the Relative Strength Index (RSI) has also retreated.
The pair has also formed a bearish flag pattern. Therefore, there is a likelihood that it will break out lower in the coming days. If this happens, the next key level to watch will be at 48,000.