Bitcoin top-down analysis – 18 July 2022

  • BTCUSD
    (${instrument.percentChange}%)

Weekly


Bitcoin's RSI touched oversold a month ago, on 18 June (black vertical line). Since then, the cryptocurrency has bounced as the oscillator normalised. However, the weekly chart shows a lower peak (LP) followed by a lower trough (LT). This pattern defines the cryptocurrency's primary trend, which is still down. Moreover, this scale's momentum is down, with the stochastic positioned in its lower quintile (green rectangle).

Daily


Since the oversold reading on the weekly, the daily chart has pulled back to relieve this pressure. As a result, daily price action may have charted a flag continuation pattern (parallel turquoise lines). However, a valid pattern must complete with a breakdown. Current price action is, to the contrary, testing the upper boundary.

Therefore, we note a resistance level (red shaded horizontal) at current price levels. If broken to the upside, price action will nullify the continuation pattern.

Real Rates are Helping BTCUSD


Source: www.tradingview.com

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Since the weekly RSI touched oversold, real interest rates have declined (top chart). This decline has supported risk instruments. In this regard, BTCUSD (bottom chart) appreciated during the period. As such, real rates are essential to keep an eye on. Therefore, Fed policy remains a vital determinant for the bitcoin trajectory.

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.

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