The continued slowdown in inflation in March in the United States and the prospect of a bearish monetary pivot from the FED are still the two factors anchoring the upward trend in the price of bitcoin. The latter is trying this week to make a technical breakout of the chartist resistance at $29,000, a potential signal that must be confirmed at Sunday’s weekly close.
Inflation continues to decline in the United States, the US dollar is under downward pressure
The bullish performance of Bitcoin (BTC) price this year now exceeds 80%, including 35% for the only part that followed the banking crisis of March. Gold, silver and BTC are in the same basket of winners from the distrust of US regional banks, but it is not the banking crisis that is behind the bull movement in BTC and precious metals.
This episode of banking stress maintained an older dynamic of capital outflows against the US dollar on the foreign exchange market. The bearish movement of the US dollar began last fall and is acting upwards in the crypto market through a well-established inverse correlation effect over time.
Recall the sources of the decline of the US dollar :
- The disinflation sequence initiated a few months ago in the United States;
- The increase in the probability of a recession in the United States;
- The temporal proximity envisaged for the Terminal rate of the Federal Reserve (FED);
- An anticipated downward pivot this year for the Fed’s interest rate cycle;
- More generally, a gradual de-dollarization of the world economy, a desire in particular displayed by several large countries in Asia.
So let’s keep in mind that bitcoin would not be at $30,000 without this general decline in the dollar on Forex and therefore, it is imperative that the dollar continues to decline for BTC to reach further upside price targets.
In terms of technical analysis of the dollar (US, always), the market is currently testing the threshold of 101 points, a level that would accelerate the decline if it were broken.
Chart that juxtaposes the weekly Japanese candles (left) of the price of the US dollar (DXY) with the Japanese candles in daily data (right)
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Bitcoin Attacks Major Chartist Resistance at $29,000
Let us now return to the graphic considerations for the price of bitcoin which is trying this week to overcome the major resistance of 29,000 dollars, i.e. the upper part of the powerful bearish gap which had been opened on Monday, June 13, 2022.
If this resistance is breached based on a weekly close, then the next chart targets will be at $32,500 and $34,000.
Finally, I note that the dominance of BTC is maintained under the resistance at the top of its range, little by little the witness is passing into the hands of ETH and certain altcoins. If the troops start to follow the general, then it will be positive for the overall bullish pattern.
Chart showing Japanese candles in monthly bitcoin price data
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Vincent Ganne is a market strategist, technical analyst, trainer on the stock market and speaker on BFM Business. With a long experience in the field of analysis, he offers a global approach to financial markets. Both from a macroeconomic point of view and from a microeconomic point of view. Vincent Ganne also uses many aspects of chart analysis with the aim of forecasting trends in financial assets over the medium and long term.
Vincent Gane
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