Bitcoin extends bounce to test key resistance
Cryptocurrencies continue to recover nicely, although with the US dollar and bond yields rising on the back of expectations of higher interest rates for longer, it remains to be seen whether the recovery will last long.
Take Bitcoin as an example. It has bounced right where the bulls needed to step in: 21.5K. This level was an important resistance level back in November, which preceded the BTC/USD’s last plunge, before the recovery. Once resistance, this level has turned into support. At least for now. The bulls will now need to hold their ground here if they want to see higher prices. Failure to do so would be rather bearish.
At the time of writing, Bitcoin was probing resistance around 22.8K, as the bulls eyed
23K level. This is an important battle ground, especially as the dollar has shown signs of bottoming.
If in the coming days the bulls manage to push BTC above 25.2K then this would be the confirmation they need, for then we will have a clear higher high in place.
But will a rebounding dollar prevent BTC from rising further?
The US dollar is continuing to show potential bottoming signs. Tuesday’s release of hotter-than-expected US inflation data, combined with weaker CPI data from the UK and a drop in Eurozone industrial production today, have all helped to boost the appeal of the US dollar in favour of the euro and pound. We have also seen the USD/JPY take out 133.00 resistance, while gold and silver have been trending lower on the back of rising bond yields.
But whether or not the recovery for the dollar will hold remains to be seen. The greenback has absorbed a lot of hawkish Fed speak and above-forecast US data. Yet it has bounced only modestly off its lows. Investors have repeatedly shown preference to racier equities, which has weighed on the appetite for haven US dollar. But is the tide turning? Will the dollar index start trending higher again? The immediate focus will be on US retail sales due for release shortly.
By Fawad Razaqzada
Take Bitcoin as an example. It has bounced right where the bulls needed to step in: 21.5K. This level was an important resistance level back in November, which preceded the BTC/USD’s last plunge, before the recovery. Once resistance, this level has turned into support. At least for now. The bulls will now need to hold their ground here if they want to see higher prices. Failure to do so would be rather bearish.
At the time of writing, Bitcoin was probing resistance around 22.8K, as the bulls eyed
23K level. This is an important battle ground, especially as the dollar has shown signs of bottoming. If in the coming days the bulls manage to push BTC above 25.2K then this would be the confirmation they need, for then we will have a clear higher high in place.
But will a rebounding dollar prevent BTC from rising further?
The US dollar is continuing to show potential bottoming signs. Tuesday’s release of hotter-than-expected US inflation data, combined with weaker CPI data from the UK and a drop in Eurozone industrial production today, have all helped to boost the appeal of the US dollar in favour of the euro and pound. We have also seen the USD/JPY take out 133.00 resistance, while gold and silver have been trending lower on the back of rising bond yields.
But whether or not the recovery for the dollar will hold remains to be seen. The greenback has absorbed a lot of hawkish Fed speak and above-forecast US data. Yet it has bounced only modestly off its lows. Investors have repeatedly shown preference to racier equities, which has weighed on the appetite for haven US dollar. But is the tide turning? Will the dollar index start trending higher again? The immediate focus will be on US retail sales due for release shortly.
By Fawad Razaqzada
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