As a seasoned analyst with over two decades of market experience under my belt, I have seen countless economic cycles unfold before my very eyes. The current easing cycle announced by the Federal Reserve is no exception, and it seems to me that we are entering uncharted territory.
The Federal Reserve recently made a move to lower interest rates for the first time since early 2020 by 0.5%. They’ve hinted at more potential rate reductions as we approach the end of this year, with another possible 0.75% cut on the horizon. This announcement has sent Bitcoin soaring to $62,000, and bullish investors are eager to capitalize on the growing liquidity.
A new easing cycle
The United States, along with the rest of the global economy, has transitioned into a phase of relaxation aimed at addressing struggling economies. This period also encompasses the upcoming restructuring of enormous amounts of accumulated debt.
The fact that the Federal Reserve is considering a significant 50-basis-point reduction in interest rates for the first time in four years indicates a high level of concern among them regarding deteriorating employment statistics, and possibly signals a shift towards economic downturn or even a recession.
In the relaxed financial climate emerging today, Bitcoin, the ruler of cryptocurrencies, stands poised to seize opportunities and potentially break free from its six-month pattern of stagnant or declining prices, hinting at a possible upward trend.
$BTC breaks descending trend line
In simpler terms, the immediate future seems to offer valuable insights into Bitcoin’s price. The downward trend line, which previously acted as strong resistance at $61,000, has been breached. This means that a significant level of resistance at $61,000 is now behind us, and the notable horizontal level of $58,000 is now in our past.
Additionally, it’s worth noting that the price is trying to rise above the 0.618 Fibonacci level at the moment. If successful, there’s another significant resistance at the 0.786 Fibonacci, slightly beyond the previous local peak. Achieving a higher high than this is crucial for BTC to break free from the downtrend and establish a new uptrend, preventing any further continuation of the downward trend.
The path out of the $BTC bull flag
On a broader perspective over the course of a week, the bull flag stands out clearly. Given that the economic landscape seems increasingly advantageous for Bitcoin in the coming months, it might require significant factors to prevent the price from surpassing the top of the bull flag.
That said, in markets it’s always best to take things one step at a time. The first step is to confirm that $61,000 becomes the new support. Then it’s on to the resistance at $65,000 and to make that crucial new higher high. Once past this, a breakout of the bull flag, and then a new all-time high would potentially send Bitcoin to $100,000.
RSI to confirm trend break on Sunday
Significantly, the Relative Strength Index (RSI), one of our key indicators, seems to suggest an impending price increase. As you can see at the bottom of the graph, the downward trend appears to be potentially disrupted. By the end of trading this Sunday, we’ll have a clearer picture if this is indeed the case. If it is, this could point towards robust upward price movement over the next few weeks.
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2024-09-19 12:10