Bearish view
- Sell the BTC/USD pair and set a take-profit at 25,000.
- Add a stop-loss at 27,000.
- Timeline: 1-2 days.
Bullish view
- Buy the BTC/USD pair and set a take-profit at 27,000.
- Add a stop-loss at 25,500.
Bitcoin held quite well this week even as a risk-off sentiment continued and the fear and greed index crashed. The BTC/USD pair was trading at 26,000 on Wednesday, the lowest level since September 14. This price is much higher than this month’s low of 24,950.
Fear and greed index retreats
A sense of fear has engulfed the financial market in the past few days. As a result, the fear and greed index has dropped to the fear zone of 30. In most periods, stocks and cryptocurrencies crash when investors are increasingly fearful.
This sense of fear has been exemplified by the performance of the US dollar. The dollar index has jumped to $106, the highest level in months. Similarly, the price of crude oil has moved by more than 20% from the lowest point in June this year.
American stocks have also slumped in the past few weeks. The Dow Jones index crashed by more than 400 points on Tuesday, the worst day in months. The tech-heavy Nasdaq 100 and S&P 500 indices have crashed by more than 8% from their highest points this year.
Therefore, it is quite surprising that Bitcoin and other major cryptocurrencies have remained steady in the past few days. Most notably, Bitcoin has remained above the important support level at $26,000.
The risk-off sentiment has happened because of the hawkish Federal Reserve. In its meeting last week, the Fed decided to leave rates unchanged between 5.25% and 5.50%. It also pointed to an additional hike later this year.
If this hike happens, it will happen at a time when risks to the American economy are rising. Mortgage rates are approaching 8%, default rates are rising, and consumer confidence is slipping.
BTC/USD technical analysis
The BTC/USD pair has been moving downwards in the past few weeks. In this period, the pair has dropped below the 50-period moving average while the MACD has moved below the neutral point. The Relative Strength Index (RSI) has continued moving in a downward trend.
Bitcoin has remained below the Ichimoku cloud. Therefore, the BTC/USD price will likely remain in this range and then make a bearish breakout. If this happens, the next key support to watch will be at 25,000. The alternative scenario is where the pair rebounds to the resistance at 27,000.
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