BTC's breakout of a month-long range preceded the data releases last week, but we saw no further follow-through. What can we expect next?
BTC started last week with weakness after the pump and the attempt to challenge previous week’s high around $30,500 on Sunday was sold off.
In the European session, it was still heavy and eventually dumped and broke $29,500 support.
That level was a lower band of the range in which BTC had been trading for a month, strongly defended especially in the week before, hence with lots of liquidity below.
The news about the SEC accusing Binance of inflating trading volume helped the breakout.
However, once the liquidity was cleared and BTC printed $28,860 low, it started grinding up.
On Tuesday and early on Wednesday, the market was relatively quiet in anticipation of the Fed rate decision later on Wednesday.
As expected, FOMC delivered a 25bps hike and later during the presser, Powell left options open for Sep hike but all in all, the speech was interpreted as dovish.
That gave the market a lift to almost $29,700, which was short-lived as sellers stepped in and it retraced just after the presser.
Early on Thursday, BTC was slowly grinding up before the ECB rate decision and Q2 US GDP.
ECB gave us an expected 25bps hike but sent a dovish message.
GDP came out hot at 2.4% vs 1.8% expected, which supported Powell’s comments from the day before that Fed is no longer forecasting recession.
On top, the GDP Price Index was much weaker in line with the disinflation theme.
BTC however, didn’t want to go up so eventually it started to be pressed down.
Early on Friday, BOJ surprised with a hawkish policy move to loosen its yield curve control by moving cap on JGB yield from 0.5% to 1%.
That bearish news caused only a small down move.
Later, BTC tried to move up after weaker PCE was released and the news came out about the bill passed to protect the right to self-custody BTC and crypto.
That was however retraced by the end of the day.
After a quiet Saturday, Sunday saw a late pump which was later sold off, caused by the news on Curve’s exploit but reversed by the end of Sunday.
Eventually, BTC was negative last week and managed to break $29,500 support, but closed only slightly below.
BTC broke $29,500 support on Monday, and has been staying below, which is bearish.
However, there was almost no follow-through with lots of absorption once stops got triggered on the breakout, and BTC traded close to resistance (previous support) for the whole week.
That makes us cautious as it’s not what you would expect from a weak market and there is a risk of a trap.
Traders would like to see continuation of the move after the breakout (ideally with acceleration) or retracement to reclaim the level from below, followed by rotation to the downside for another leg down – but none of that happened.
There are no reasons to turn bullish now as BTC hasn’t managed to come back up decisively, but stays below resistance.
For now, we have a situation where attempts to move up towards $29,700 (or even $29,500) are being sold off.
Same goes for downwards to $28,800 (or even $29,000) being bought, giving us a tight range.
We need a sustainable break out of that range to be able to expect bigger directional moves.
Of course even if that happens, it’s worth watching how it’s unfolding further.
Unfortunately, it’s still a boring market for longer-term traders as BTC stays indecisive with only tame moves.
Chasing short-term liquidity in these thin market conditions remains the name of the game on BTC for now.
That presents opportunities just for short-term traders.
Have a great trading week ahead!
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