Two patterns are at work on the bitcoin chart, and both are pointing lower


Following our previous article, bitcoin continues to capitulate. There are two technical patterns at work here. The first is the rising wedge (turquoise converging lines). This pattern is a bearish continuation, and its measured move gives a target of around 19K (turquoise horizontal).

The second pattern is a large head and shoulders top, which is a reversal pattern. I.e. the reversal of bitcoin's previous uptrend. The left shoulder (LS) is higher than usual, but that is due to the underlying emotion driving price action (the RSI was overbought for six months at the time). This pattern's measured move gives a downside target of just below 16K (red horizontal).

The stochastic measures momentum and is below 20 (green rectangle). This area represents intense downwards pressure, and the longer this position is maintained, the more credible the targets become.

Today's Fed rate announcement and press conference will significantly determine if the stochastic stays below 20. The proverbial writing is on the wall if it signals that it will continue to fight inflation aggressively. In this case, yields are likely to respond, which will support the dollar.

Any yielding by the Fed in this regard will most likely give some relief to the battered cryptocurrency market. However, this is not our base case scenario.

Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.

${} / ${getInstrumentData.ticker} /

Exchange: ${}

${} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.