At the start of the week, held steady near Friday’s high, currently trading around $63,760. This recent price surge follows a speech by US Federal Reserve Chairman Jerome Powell, who hinted at a potential interest rate cut in September.
Such a move boosts the appeal of risky assets like cryptocurrencies, as lower interest rates could diminish the attractiveness of fixed-income investments, potentially shifting capital flows into alternatives like Bitcoin.
Despite the dovish boost from Powell, the crypto has failed to sustain a lasting rally as it is up against a strong resistance that’s limiting the upside potential for now.
In this article, we’ll take a look at the technical situation and identify key levels and indicators to monitor for a possible breakout.
Technical View: 100 DMA Holds Firm
Bitcoin faces an intriguing yet challenging technical situation. The price hovers just below the 100-day moving average at $63,795, a key resistance level. A sustained move above this point could signal a continuation of the recovery and reignite bullish momentum.
Currently, the 200-day moving average at $63,419 provides support. This long-term support line will be crucial for maintaining a bullish outlook. A significant drop below this level could cloud the positive picture and potentially trigger a stronger downward movement. Additionally, the 38-day moving average at $62,205 offers dynamic support and has historically acted as a rebound point.
Attention also focuses on the sloping resistance line from the record high of around $68,900. Breaking through this resistance could signal a strong bullish trend and set the stage for testing the all-time high at $73,939. Technical indicators present mixed signals. The Relative Strength Index (RSI) stands at 56.9, reflecting neutral territory and suggesting room for upward movement without being overbought.
Meanwhile, the MACD hints at slight upward momentum. Overall, the current setup supports a bullish scenario, indicating that the recovery trend might gain further strength.
Downside Risks
Despite the positive outlook, we must keep an eye on potential downside risks. A sustained break below the 200-day moving average at $63,419 could undermine market confidence and trigger a sharper decline. Watch the 38-day moving average at $62,205 closely; a drop below this level might signal the start of a correction.
Another risk comes from the declining resistance line at $68,900. If Bitcoin fails to break through this level again, it could dampen bullish sentiment and increase selling pressure. In such a scenario, support of around $60,000 would become crucial. Falling below this level might pave the way for a test of the August 15 low at $56,275.
Fundamental Risks
In addition to the technical factors, the macroeconomic environment is decisive. The prospect of interest rate cuts in the US has given Bitcoin a short-term tailwind. However, monetary policy uncertainty remains, which could lead to increased volatility in the coming months.
Should cut interest rates in September, but without a clear prospect of further easing, this could damage the appeal of cryptocurrencies and lead to a broader sell-off.
Bottom Line: Bitcoin Remains at a Crucial Decision Point
Bitcoin is at a crucial point. On the upside, overcoming the declining resistance line at 68,900 dollars offers the potential for significant price gains.
However, investors should not underestimate the risks. A break below the moving averages, in particular the 38-day moving average, and below the $ 60,000 mark could lead to a stronger correction.
***
Disclaimer: This article is written for informational purposes only. It is not intended to encourage the purchase of assets in any way, nor does it constitute a solicitation, offer, recommendation or suggestion to invest. I would like to remind you that all assets are evaluated from multiple perspectives and are highly risky, so any investment decision and the associated risk is at the investor’s own risk. We also do not provide any investment advisory services. We will never contact you to offer investment or advisory services.
