BTC/USD Forex Signal: Bitcoin Retreat Still On After the Hawkish Fed

The pair will likely continue falling as sellers target the next key support level at 17,700. A move above the resistance level at 20,000 will invalidate the bearish view.

Bearish view

  • Sell the BTC/USD pair and set a take-profit at 17,000.
  • Add a stop-loss at 21,000.
  • Timeline: 1-2 days.

Bullish view

  • Set a buy-stop at 20,000 and a take-profit at 22,000.
  • Add a stop-loss at 18,000.

The BTC/USD price dropped and then pulled back after the Federal Reserve delivered its interest rate decision. It crashed to a low of 18,686 and then bounced back to 19,950 as the market reflected on the impact of the jumbo rate hike.

Fed interest rate hike

The BTC/USD price was a bit volatile after the Fed decided to continue with its aggressive tightening policies in a bid to combat the soaring inflation. As was widely expected, the Fed decided to hike interest rates by 0.75% for the third straight meeting.

In its statement, the Fed warned that more rate hikes were on the way. The committee expects that interest rates will end the year at 4.4% and then peak at 4.6% in the coming year. As such, another jumbo hike of 0.75% will likely happen in November.

At the same time, the dot plot showed that the Fed will then start cutting interest rates in 2023 or 2024. It expects that rates will drop to 3.9% in 2024. In most cases, cryptocurrencies like BTC and ETH tends to drop in a period of high-interest rates.

Other central banks have embraced a hawkish tone as well. Earlier this month, the European Central Bank (ECB) delivered its second consecutive interest rate hike. In a statement this week, Christine Lagarde warned that the bank will continue hiking.

On Tuesday, Riksbank, the Swedish central bank delivered a 100 basis point hike. And on Thursday, analysts expect that the Swiss National Bank (SNB) and the Bank of England will continue raising interest rates.

Still, inflation remains substantially high in most countries despite the substantially high rates. In the United States, the headline CPI dropped to 8.3% in September while in Europe, consumer prices surged to a record high.

BTC/USD forecast

The four-hour chart shows that the BTC/USD pair has been in a bearish trend in the past few days. It remained relatively volatile after the Fed decision. The pair moved slightly below the 25-day and 50-day moving averages while the Awesome Oscillator has moved below the neutral point. The Stochastic Oscillator has moved to the neutral point.

Therefore, the pair will likely continue falling as sellers target the next key support level at 17,700. A move above the resistance level at 20,000 will invalidate the bearish view.

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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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