Following our top-down analysis of August 15, we amend the daily pattern to a flag continuation. This is because the cryptocurrency has broken down, and the measured moved gives a target of 14,240. This mark is 12% down from current levels. Measured moves tend to be academic - either hit or not.
However, the left chart shows that the daily stochastic has rolled over and is heading towards the 20 levels (blue arrow). If it drives that low, bitcoin will be under further pressure. Moreover, the longer the stochastic maintains at those levels, the greater the chance of the target being achieved.
Inflation is still a worry, especially the possibility of sticky inflation. If the Fed maintains a tight monetary stance, risk markets will be under pressure as the discount rate declines. This adjustment will include the market for cryptocurrencies. As such, communication on policy remains vitally important.
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.