The pair will likely pull back further as sellers target the first support of the pivot point at 19,500.
Sell the BTC/USD pair and set a take-profit at 19,500.Add a stop-loss at 21,000.Timeline: 1-2 days.
Buy the BTC/USD pair and set a take-profit at 21,500.Add a stop-loss at 19,500.
The BTC/USD price pulled back as the recent rebound waned. It dropped to a low of 20,200, which was below last week’s high of 21,080. This price is about 12.8%, which was higher than the lowest level last month.
BTC rebound fades
Bitcoin had a strong performance in the final part of October as the US dollar index slipped to the lowest level in more than a month. The index, which tracks the performance of the greenback against other currencies, declined from $115 to about $109.
Bitcoin’s resurgence coincided with the strong performance of American stocks. The Dow Jones rose by more than 14% in October, the biggest increase in more years. S&P 500 and Nasdaq 100 indices rose by more than 10% as well.
The BTC/USD price pulled back in the overnight session as US indices dropped and the US dollar index rose by more than 70 basis points. The Dow Jones dropped by 40 points while the S&P 500 dropped by 50 basis points. At the same time, the CBOE VIX index rose by 50 basis points.
The BTC/USD price declined as investors refocused to the upcoming interest rate by the Federal Reserve. Economists expect that the Fed will hike interest rates by 0.75% and point towards more hikes in the coming months.
Analysts at Goldman Sachs, UBS, and Bank of America made a case that the economy is doing well and that the bank will not hint at pivoting. They pointed to recent data that revealed that consumer spending was doing well and that the economy recovered in Q3.
Goldman analysts expect that the Fed will hike rates to 5% by March next year. In a recent statement, Ray Dalio, warned that 4.5% rates will lead to a 20% dip of the S&P 500. As such, such a move would have a negative impact on Bitcoin.
The four-hour chart shows that the BTC/USD pair peaked at about 21,093 last week. It has formed a small double-top pattern while the RSI has moved slightly below the neutral level at 50. The pair is still being supported by the 50-day moving average and is at the standard pivot point.
Therefore, the pair will likely pull back further as sellers target the first support of the pivot point at 19,500. The stop-loss for this trade will be at 21,000.