The king of cryptos awaiting the verdict of the FED! – It was a very busy week across all risky asset classes with a special mention for equity indices. Indeed, the latter made us see all the colors by finishing Friday’s session in style, despite the disappointment of the results of the GAFAM. Without naively prejudging price manipulation on the financial markets, the end-of-month effect could explain this renewed form. Especially since the month of October would end in the best of ways by erasing the disastrous months of August and September.
At the same time, Bitcoin (BTC) is giving us the start of a response by going back above $20,000 last Tuesday. Is this enough to put pressure on the bears? Or rather will the bulls enter through the front door? In any case, a showdown between the two camps finally seems to be taking shape. In this sense, the next FED meeting on November 1 and 2 could be a turning point. So much so that the king of cryptos would potentially extricate himself from his 2017 ATH. But in what sense?
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Bitcoin in Weekly Units – Prices Storming the Tenkan
After crossing the descending line of the bear run without real conviction, Bitcoin finds itself in contact with the Tenkan thanks to a weekly bullish candle above the $20,000 support. Although this favorable technical signal remains timid compared to the significant thickness of the Kumo future in view of the first quarter of 2023, the bulls are regaining some hope.
In the event that BTC prices break free from the Tenkan, we would validate a throwback on the $20,000 with the possibility that the Chikou Span does the same. But even better, they would increase its chances of rising towards the resistance of $26,000. And if it were to take place ideally, it would lead us to a double bottom, which as a reminder, is a bullish chart pattern. To achieve this, it would be necessary to recover more than twenty percent as we speak.
However, despite the likelihood of a larger rebound, the king of cryptos might come up against the harsh reality of price position and that of the Chikou Span below the Kumo (Ichimoku Cloud). Especially since these two technical signals have persisted for many months. And when that becomes important, they could weigh heavily in the run-up to a neutralization of Bitcoin’s bear run since its last ATH in November 2021.
Bitcoin in daily units – Prices finally inside the Kumo
Returning beyond $20,000, Bitcoin prices finally re-entered the Kumo in daily units. This would pave the way for them towards $22,000. And if the rebound attempt managed to gain momentum by crossing this resistance, they would be above the cloud… but not only. Indeed, the Chikou Span would be simultaneously. Hence the hypothesis that the king of cryptos would have some underfoot to go higher. For this, the goals would be adapted according to what will happen in weekly units.
Otherwise, a return below $20,000 would take BTC prices and the Chikou Span below the Kumo. With bears targeting the $16,000 support, then plausibly the $12,000 support if the market environment were to spin again. In which case, we would confirm a third wave of correction since its last ATH in November 2021, which itself would express a form of bull capitulation.
In summary, we may have the feeling that the bulls are gradually taking over the bears in this showdown that has just begun since last Tuesday. However, Bitcoin still remains in its bear market since its last ATH in November 2021. Indeed, we do not see any higher highs than the previous ones which would allow us to see the beginning of a defeat on the bear side.
The FED meeting on November 1 and 2 will be closely watched by investors. So much so that, given the recent surge in risky asset classes, we are already anticipating a pivot, ie a transition from a restrictive monetary policy to a more accommodating monetary policy. Personally, and this is my own, I would opt for caution.
On the one hand, the FED will not be able to put liquidity back on the financial markets as before given that inflation is not falling significantly. And on the other hand at the Jackson Hole symposium last August, it was ready to slow the economy or accept a recession to meet its mandate of consumer price stability.
As this main objective has not yet been fulfilled, it will be feared that the next FED meeting will not live up to expectations. Even if in the speech, President Jérôme Powell adopted a balanced tone about monetary policy, beware of the backlash at the slightest misinterpretation. As a result, Bitcoin itself, being liquidity-sensitive, would not see the end of the tunnel any time soon…just like equity indices.
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