It shouldn’t be surprising that as the stock market rebounded on positive expectations for trade deals, so did Bitcoin. The cryptocurrency is driven by the same macro factors that influence the stock market.
The market is now in a bit of a consolidation as we await the next key catalyst which will likely be the details of the first trade deal. Everything revolves around that because on the rates front, the Fed is not going to cut amid this uncertainty until the labour market cracks.
Therefore the focus remains on that first trade deal which US officials continue to repeat will likely be announced by the end of the week (or Monday at the latest).
The market will want to see if 10% is the floor or we can get lower. Above 10% will likely be taken as a disappointment and should trigger another selloff. Conversely, a rate below 10% (the lower the better) should take us to all-time highs pretty quickly.
On the daily chart, we can see that the price broke above the key resistance zone around the 90K level and went into a bit of a consolidation around the 95K level as the market awaits new information on the trade front. From a risk management perspective, the buyers will have a better risk to reward setup around the 90K level to position for a rally into the all-time highs. The sellers, on the other hand, will want to see the price breaking lower to extend the drop into the 85K level next.
On the 4 hour chart, we can see that the price action formed what looks like an expanding rising wedge. The buyers will likely continue to lean on the trendline to keep pushing into new highs, while the sellers will look for a break lower to extend the pullback into the 90K level. Watch out for the FOMC decision today as it could provide a dip-buying opportunity as the market continues to keep a positive outlook for the first trade deal
