Bitcoin (BTC) holding support – up from here?

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As a seasoned analyst with over two decades of market experience under my belt, I find myself intrigued by the current state of play between Bitcoin (BTC) and gold, given the upcoming first rate cut by the Federal Reserve. With a knack for spotting trends and patterns, I can’t help but see parallels in their trajectories, especially amidst the weakening U.S. dollar.

Bitcoin‘s current position is above the $58,000 level, serving as a strong support. This week could potentially see the Federal Reserve’s first reduction in interest rates, indicating a shift towards easier monetary policies. As the U.S. dollar weakens, gold has shown strength. Could Bitcoin now mimic gold’s pattern?

First rate cut to be made on Wednesday

1) The world economy remains quite uncertain, and political instability persists following the failed assassination attempt on presidential candidate Donald Trump. Despite high unemployment rates and lower inflation in the U.S., the Federal Reserve is optimistic enough to forecast a reduction in interest rates for the first time since the pandemic started in early 2020.

Over the past week, predictions about the magnitude of the interest rate reduction to be announced on Wednesday have significantly fluctuated. A mere 15% probability of a 0.5 percentage point decrease was anticipated just seven days ago; however, as we approach the announcement, the Fedwatch tool suggests a 59% likelihood of a larger initial cut.

Some experts anticipated that the initial reduction would amount to a quarter of a percentage point, as the Federal Reserve might prefer to avoid a half-percentage point cut, fearing it could be perceived as hasty action that suggests desperation and implies they were slow in initiating rate reductions.

Dollar Index continues to weaken

For now, the U.S. dollar continues to decline. At a significant point of resistance, the U.S. Dollar Index (DXY) has broken past its recent uptrend, which could be advantageous for riskier investments like gold and Bitcoin.

Short term bounce for $BTC

Over the immediate period, the Bitcoin price is climbing within an upward-sloping channel. For the moment, the significant horizontal point at $58,000 has been maintained, and if this ongoing surge persists, the price might revisit the channel’s upper limit.

Lower low needs to be avoided

Examining Bitcoin’s price on the daily chart, it’s important to consider the potential for a new low if Bitcoin cannot break above its downward trend line and falls short of the previous local high at around $65,050. If this occurs, another decrease might follow.

In other words, given the Fibonacci sequence, the cost might hold steady at the present 0.382 level during this market movement. Notably, the 0.618 and 0.786 levels were crucial in the past, with the latter specifically indicating the lowest point.

Stochastic RSI on weekly crosses up

On a broader weekly perspective, the Bull Flag structure remains undisturbed, suggesting that the price may further ascend towards the flag’s peak. Meanwhile, observing the Stochastic RSI at the chart’s base, it’s worth mentioning that the lines have crossed upward – a highly optimistic sign for potential momentum. However, for this bullish signal to be even more robust, both lines should rise above the 20 level.

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2024-09-16 12:14