Bitcoin price corrects after hitting a wall on a multi-month descending trend line

On August 15, the price of bitcoin (BTC) and the broader market corrected, while the S&P 500 and the Dow made four-straight weeks of strong gains. Data from TradingView and CNBC shows the Dow is moving above its 200-day moving average, for the first time since April 21 and perhaps a signal to bulls that the market is bottoming out.

Dow Jones Industrial Average Index (DJI). Source: TradingView

While high inflation and a stagnant schedule of interest rate hikes have driven the equity market significantly higher, many traders fear that the current 32-day uptrend in the Dow and S&P 500 could be a bear market rally.

17) release from the Federal Open Markets Committee (FOMC) should give more context to the Federal Reserve’s current view of the health of the United States economy and perhaps shed light on the size of the next interest rate hike. ,

For the past month, extremely bullish crypto traders on Twitter have also been using a narrative that emphasizes selling bitcoin, ether (ETH) and altcoins before FOMC meetings and then rallying afterwards if the rate is set. aligns with the estimated figures of investors.

Somehow, this short-term dynamics also contributes to investor confidence that the Fed will “pivot” its monetary policy from interest growth and quantitative tightening after “inflation peaks.” This can be a somewhat profitable trade for savvy day-traders, but it’s important to note that inflation is currently at 8.5% and the Fed’s target is 2%, which is a long way to go.

Ultimately, the price of bitcoin maintains a high correlation to the S&P 500, so investors would be wise to avoid narratives such as tunnel vision that align with their bias and tracking the performance of equity markets.

Bitcoin Sells at Multi-Month Trendline Resistance

Over the weekend, bitcoin made a strong move on a multi-month downtrend line and broke the $24,000 level, following a path that many traders had predicted would lead to an upside move and the VPVR gap above $28,000. Will be filled up to the $29,000 level.

trader’s trades Told “BTC really looked like it was going to go last night” but selling at resistance created an “outside bar” where “the prior trend was challenged” and according to Cheds, this is a sign that “the trend is halting.” May and may be on the lookout for signs of further weakening.”

Merchant under the pseudonym “Big Smokey” agreed that a “strong directional moveCiting a tightening in the Bollinger Bands and different Super Guppy indicators may be on the cards as the bitcoin price moves closer to a multi-month downtrend line.

In a separate chart, Big Smokey suggested That if the descending trendline is broken, bitcoin could see a “26% pop to $28K before cutting further sideways”, resulting in an eventual retest of the $24,000 level.

After hitting similar overhead resistance levels, most altcoins also followed bitcoin’s uptrend by posting single-digit losses, but those that were flashing downward signals are still rounding out with a reversal pattern.

AVAX, FTM and SOL daily charts. Source: TradingView

related: Shiba Inu tracks 50% rally as price enters ‘cup-and-handle’ breakout mode

Every dog ​​has its day

Interestingly, on Sunday (14 August) popular traders on crypto Twitter predicted that sharp gains from meme tokens like Shiba Inu (SHIB) and Dogecoin (DOGE) were a clear indication that Bull phase was over-extended And on the way to improvement.

Ultimately, after rallying 130% and 42.5% from Ether and BTC, each was ready to take a slight profit, especially at resistance. Open interest on both assets is close to all-time highs, but what would have to happen to trigger BTC to breakout or breakout at the multi-month downtrend line is unknown.

Perhaps a 1% increase, tighter crypto regulations or a surprise change in the equity markets could send the price back to yearly lows. Alternatively, a successful Ethereum merge could be a positive catalyst that triggers a higher volume surge above Bitcoin’s key resistance level.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, so you should do your own research when making a decision.