Even after the Federal Reserve Chairman Kevin Warsh announced a 25 basis points rise in U.S. interest rates on Wednesday, Bitcoin was able to stave off this bearish news and somehow stay above the last-ditch support at $75K. Can the $BTC price remain in its sideways consolidation pattern, or is it just a matter of time before the big drop?
Rate hike causes bearish drop out of bull flag in S&P 500
Source: TradingView
The above 4-hour chart for the S&P 500 shows how the U.S. stock market reacted to the Fed rate hike announcement on Wednesday. A great looking bull flag broke to the downside, with the Index wicking down out of the flag and rebounding off of the 200 SMA which is rising to meet it.
As can be seen, by the close, the Index was almost back to the lower trendline of the flag. If the market starts brightly on Thursday, this could just be one very quick fakeout. If not, and the 25 bps rate hike does have a pacifying effect on the stock market, there could be a confirmation of the underside of the flag before the price moves downward. The upper trendline of the multi-year channel would perhaps be a good place for investors looking to reenter the market.
Bulls cling on and chart starts to turn more positive
Source: TradingView
The parallel channel has been redrawn to include the bulk of the $BTC price action. As can be observed in this short-term time frame, the bulls have been adamant in keeping the price above the bottom of the channel at $75,600 despite several candle tails down below.
With the $BTC price getting above the $76,300 resistance and also finding great support so far on top of the 200 SMA, what was an extremely bearish position is starting to turn around and become a lot more positive.
Bull flag intact and golden cross in daily time frame
Source: TradingView
Viewing the $BTC price in the daily time frame it can be seen that the flag pattern at the top of the huge rally is still intact. Wednesday’s bounce from the bottom trendline of the flag was very bullish. If the price maintains above this last line in the sand and continues to consolidate, the chances of a break to the upside will increase.
Another bullish factor is the recent cross up of the 50-day SMA over the 200-day SMA. This is called a golden cross, and tends to take place at or near bear market bottoms. The last time these two moving averages crossed was just after the bull market top when the opposite happened, as the 50-day SMA crossed down below the 200-day SMA.
Can 50-week SMA be turned into support for new bull market?
Source: TradingView
In the weekly time frame the 50-week simple moving average (SMA) provided support for the entirety of the last bull market, with the $BTC price closing below this average for the first time just after the bull market top. Currently, the 50-week SMA is providing strong resistance. If this resistance can be broken and the price makes this average support again, this could be yet another sign that the bear market is indeed over.
At the bottom of the chart, the RSI illustrates the 2.5 year descending trendline. The indicator line has got above this trendline and if it’s able to confirm the trendline as support this would be another nail in the bear market coffin of the bears.
A lot is riding on the $BTC price staying above the bottom of the flag – a new bull market depends on it.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
