Will U.S. CPI Ignite a Rally for Bitcoin, Ethereum?
Investing.com | Jul 10, 2023 15:49
- Ahead of US inflation data, Bitcoin remains trapped in a sideways trend
- Ethereum, on the other hand, remains bullish
- Will a favorable CPI spark a rally in both cryptos?
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Bitcoin has been stuck in a sideways movement since late June. Sellers have been exerting pressure around the $31,000 mark, but buyers have consistently stepped in around $30,000, showing resilience thus far.
Bitcoin's price has been fluctuating between $30,000 and $31,000, with occasional attempts to move higher but ultimately falling back to the $29,700 range. However, a partial recovery towards the end of last week helped Bitcoin maintain its position around $30,000.
In terms of trading volumes, Bitcoin started the week positioned between two significant exponential moving average (EMA) values. The 21-EMA, currently at $29,800, serves as a crucial support level and coincides with the lower boundary of the resistance area. A breach below this value may indicate a downside breakout in the Bitcoin price.
For potential pullbacks, one important level to monitor is the long-term uptrend line at $28,900, which aligns with the 0.382 Fibonacci retracement level. A decline to this point could be considered a healthy correction before the trend continues. Another intermediate support level is around $28,000; watch out for daily closes below $28,900. Further decline may bring the support zone of $26,000 - $27,000 back into focus.
Regarding resistance, the closest level to watch is the 8-EMA at $30,300. During the past week, Bitcoin struggled to surpass this average, accompanied by low-volume transactions. To strengthen the upward trend, it would be significant for Bitcoin to stay above $30,500 after hourly closes on this resistance until mid-week. If successful, Bitcoin could target the recent peak at $31,500 and potentially move towards the range of $32,000 - $34,000 based on daily candle formation above that level.
Nonfarm payrolls data in the US was below expectations on Friday, offering support for buying Bitcoin from the week's lows. However, the market focus seems to have shifted towards the US inflation data, which will be released on Wednesday.
Analysts anticipate a drop in US core inflation to 5% on an annualized basis. Last month, Bitcoin experienced a brief rally of 25% from $25,000 to $31,000 following a pullback in US inflation, which aligned with market expectations. Additionally, the positive effect of BlackRock's spot Bitcoin ETF application contributed to this uptrend.
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If US inflation data for June follows a similar trend as expected, it may increase the risk appetite for cryptocurrencies. Inflation is closely monitored by the Federal Reserve and impacts interest rate decisions.
In such a scenario, if Bitcoin shows a similar pattern as it did after last month's data release, it could potentially move towards the range of $32,000 - $34,000, gaining momentum after testing the 0.382 Fibonacci retracement level below $29,000.
h2 Ethereum: Technical View/h2Ethereum faced significant resistance around the $1,950 mark last week. This price level proved to be a crucial barrier for the continuation of the trend, aligning with the 0.618 Fibonacci retracement level based on the previous decline.
During the previous week, Ethereum experienced a decline, with the short-term support zone reaching $1,825 as selling pressure emerged around the $1,950 level. It's worth noting that this price level has been significant as a support-resistance point since May.
If Ethereum manages to hold the $1,825 support in this week's trading, increased demand in the second half of the week may drive a return to the $1,900 range and potentially break through the resistance zone around $1,950. Such a trend could attract enough buying interest to push Ethereum toward the $2,000 range.
On the downside, if the $1,825 support level is not maintained, attention will shift to $1,750 as another closely watched support point, particularly for daily closes below this value.
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