Will this week mark the end of range-bound trading…or not?
Last week was packed with events and data which had a potential to give the market direction, but nonetheless it stayed range-bound.
BTC started last week (a new month) weak after an attempt to push the price higher and attack the 2023 high failed.
We had a selloff just after we opened for May and continued through Monday.
FRC troubles, which were putting downward pressure on bank stocks and helping BTC in the previous week, finished as the bank was seized and sold to JPM.
BTC got to $27,660 (setting weekly lows) and then bounced - helped by Yellen who said that the US Treasury can run out of cash by June 1st.
That made the market turn its focus to the debt ceiling issue with BTC benefiting.
On Tuesday, banking sector issues started coming back to the spotlight with regional banks plunging and BTC buying as a safe haven.
On Wednesday, FED delivered 25bps rate hike as the market expected.
Powell was more hawkish but hinted at a pause and tried to convince market participants that the banking sector is sound and resilient.
All in all, we had increased volatility in reaction to rate decision and presser, but no clear direction.
Later in the day after the cash equity market closed, PACW shares got hammered by ca 50% and other regional banks followed south, giving BTC a boost.
It kept going up slowly - till the end of Friday with retracements being bought and new highs sold off.
Even NFP (quite neutral with higher Apr. number, but downward revision to the previous month) and the lower-than-expected unemployment rate didn’t affect the market much.
On Saturday, BTC set a weekly high getting close to $30,000, which worked as important resistance in the previous week.
Later, moves on ETH Foundation wallets got detected and BTC started being sold off and continued through the weekend.
On Sunday, Binance halted BTC withdrawals due to large vol. of pending transactions which created FUD and further selling.
BTC registered down last week and weakness continued with Binance halting BTC withdrawals yet again early this Monday.
Not much has changed in our approach since last week.
BTC trades in the $26,500 - $31,050 range and even though it has quite wide daily swings, it’s usually on low liquidity and lacks directional conviction with market focus changing.
As such, we try not to be too biased and not have big expectations but follow current market themes and momentum.
That also means taking advantage of shorter-term moves, and taking some partial profits when the market is cooperating.
We look for hints from the market which can confirm the current momentum, or suggest a change and keep an eye on price behavior around important levels in the range when the price gets there.
Being flexible and not overconfident is important, especially in the current market environment.
For now, from the downside we have challenges around $27,200 - $27,000 area, then $26,500 (current range low) followed by $25,300 - $25,000 area.
From the upside, we have minor resistance levels at $28,000, $28,300, $28,600 and $29,150 before the key one at $30,050, which would open the way for a retest of 2023 high at $31,050.
On the macro front this week, CPI on Wednesday is going to be the key event with the biggest potential to move the market.
Other data to keep an eye on:
Mon: Wholesale Inventories
Thu: BOE Rate Decision; PPI, Jobless Claims
Fri: Michigan Consumer Sentiment
We also have Fed speakers lined up across the week.
Also worth monitoring on what’s going on in the banking sector, especially the situation with regional banks and on the other hand, FUD around Binance's BTC withdrawals issues.
Let’s see if BTC manages to finally break-out this week, or we will keep on trading in the range for another week.
As always, be ready for different scenarios.
Have a great trading week!
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