Bitcoin (BTCUSD) recently experienced a surge in upside momentum, propelling it beyond the $70,000 mark. This ascent coincided with a weakening U.S. Dollar and heightened interest in risk assets.
However, the rally was short-lived as sellers swiftly reentered the market, highlighting the $70,000 level as a significant hurdle. The Dollar regained strength fuelled by positive economic indicators, including lower-than-expected continuing jobless claims and robust PMI reports indicating strong growth in both manufacturing and services sectors. The S&P Global Composite PMI reaching 54.4, surpassing expectations, bolstered the Dollar. Consequently, Bitcoin faced a minor setback.
This week, all eyes are on the PCE Price Index for April, the Federal Reserve’s preferred inflation measure, as traders seek insights into inflation dynamics and their potential impact on monetary policy and the positioning of the U.S. Dollar.
Technical
Last week, Bitcoin experienced a notable price swing, initially gaining 8% before closing the week 3% higher. Initially trading in a downtrend within a descending channel pattern, Bitcoin approached its 100-day moving average. As it broke below this moving average, the cryptocurrency reached a two-month low, coinciding with the channel’s lower boundary. Oversold conditions in the Relative Strength Index (RSI) hinted at a potential rebound, which materialized, leading the cryptocurrency higher.
Breaking out of the descending channel and surpassing the 100-day moving average, Bitcoin surged above the $70,000 mark. However, its upward momentum faltered at the $71,980 level amid declining upside volume, prompting bearish activity. The cryptocurrency subsequently retraced to the 50% Fibonacci Retracement level, acting as intermediate support and sparking a bullish reversal.
Should the upward momentum continue, traders may target a retest of the $71,980 resistance level. Conversely, if downside momentum resurfaces, attention may shift to the 50% Fibonacci Retracement level as a potential target.
Summary
Bitcoin faced a significant hurdle at the $70,000 mark, highlighted by sellers’ swift reentry into the market. Technical analysis indicates a potential retest of the $71,980 resistance level if upward momentum prevails, or attention may shift to the 50% Fibonacci Retracement level if downside momentum returns.
Sources: U.S. Department of Labor, S&P Global, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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