Bitcoin has rallied since its lows of late June/early July. However, this crypto strength has run with the idea that the Fed is set to turn dovish. This about-face was reinforced last week at the Fed's press conference when Fed chair Powell stated that rates were at neutral. However, several Fed officials yesterday clarified that the odds for a policy pivot are short.
Thus, it seems as if the daily bitcoin chart may have an ascending flag pattern, which is effectively a bear market rally. For this to be the case, the cryptocurrency must complete the pattern by breaking down.
To this end, monitoring the hourly chart on the right will be helpful. At the moment, the R1 pivot is acting as resistance. If this continues to hold, the indicators will be beneficial. If the EMAs and stochastic cross negatively (black ellipses), bears may be looking to enter short positions. However, for a down leg to play out, the stochastic must move below 20 and hold.
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.