BTC/USD Forex Signal: Brief Relief Rally Likely

The BTC/USD price has also consolidated as investors have become extremely fearful. 

Bullish view

  • Buy the BTC/USD pair and set a take-profit at 20,000.
  • Add a stop-loss at 18,500.
  • Timeline: 1 day.

Bearish view

  • Set a sell-stop at 18,800 and a take-profit at 17,500.
  • Add a stop-loss at 20,000.

The BTC/USD continued consolidating as the market waited for the upcoming American inflation data. Bitcoin was trading at 19,100, where it has been in the past few days. This price is slightly lower than this month’s high of 20,300.

Bitcoin consolidation continues

The BTC/USD price remained in a tight range as focus shifted to the closely-watched US inflation data that will come out on Thursday. These numbers are expected to show that the headline consumer price index (CPI) pulled back slightly in September as gasoline price fell. Core inflation, which excludes food and energy, is expected to have moved up slightly.

Inflation numbers have an impact on Bitcoin prices. For one, higher inflation usually pushes the Fed to embrace a more hawkish tone. Higher interest rates lead to a strong US dollar and higher bond yields. Indeed, the dollar index has surged to the highest level in more than 20 years while short and long-term bond yields have continued rising.

As a result, investors tend to abandon risky assets like Bitcoin and growth stocks. This explains why Bitcoin has fallen by more than 60% this year alone. In it, the Fed has hiked rates by 300 basis points. Minutes published on Wednesday showed that Fed officials believe that more rate hikes are necessary to deal with inflation.

The BTC/USD price has also consolidated as investors have become extremely fearful. According to CNN, the fear and greed index has fallen to an extreme fear level in the past few days. Top assets like stocks and digital coins tend to underperform in a period when the mood is fearful.

Volatility has also increased in the past few days. The CBOE VIX index has risen to about $33.80, which is higher than where it was a few weeks ago.

BTC/USD forecast

The 3H chart shows that the BTC/USD pair has been in a consolidation phase in the past few days. At the current price, Bitcoin is slightly above the first support of the standard pivot point. It is also slightly above the lower side of the ascending channel shown in black. The price is also slightly below the 25-day moving average while the MACD is moving sideways below the neutral level.

Therefore, while the overall trend is bearish, a retest of the pivot point at 19,630 cannot be ruled out. On the other hand, a drop below the support at 18,800 will signal that there are more sellers in the market.

BTC/USD

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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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