Bearish view
- Sell the BTC/USD pair and set a take-profit at 109,000.
- Add a stop-loss at 116,000.
- Timeline: 1-2 days.
Bullish view
- Buy the BTC/USD pair and set a take-profit at 116,000.
- Add a stop-loss at 109,000.
The BTC/USD pair remained under pressure this week, continuing a downtrend that started last week when it peaked at $117,995. Bitcoin dropped to $111,717, its lowest level since September 10. It remains 12% below the year-to-date high.
Bitcoin price has retreated in the past few days as the recent momentum waned and exchange-traded fund outflows continued. Data shows that these ETFs had over $363 million in outflows on Monday and an additional $200 million on Tuesday.
One of the potential reason for the crash is that investors have stayed in the sidelines in the past few days as they assess the impact of the recent Federal Reserve interest rate decision. In a statement, the Fed decided to cut intest rates last week and maintained a relatively dovish policy.
Bitcoin may be falling as it experiences a shakeout before a rebound in the fourth quarter. A shakeout is a situation where a cryptocurrency or another asset experiences a major crash to shed weak buyers and then resumes the bullish trend.
Bitcoin may also be falling as investors rotate to gold, which has been doing well this week. Gold has jumped to a record high as it has become one of the best-performing assets this year.
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BTC/USD Technical Analysis
Bitcoin price has plunged in the past few days, moving from a high of $124,200 to the current $111,800, its lowest level since September 10. It moved below the 50-day moving average and the 23.6% Fibonacci Retracement level.
The pair has formed a head-and-shoulders pattern, a popular bearish continuation sign. Also, the Relative Strength Index (RSI) and the Stochastic Oscillator have all pointed downwards.
Therefore, the pair will likely continue falling as traders target the 50% Fibonacci Retracement level at $99,400. The bearish outlook will become invalid if the pair jumps above the right shoulder at $117,990. Such a move will point to more gains, potentially to the psychological point at 120,000.
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